After January’s meeting with the House Committee on Financial Services, the US House of Representatives will consider the Small Company Disclosure Simplification Act at a later date. What does this mean for roughly 60 percent of all reporting companies?
The bill itself will exempt emerging growth companies with total annual gross revenues of less than $250 million from reporting in XBRL. Many claim this is about 60 percent of all reporting companies. The exemption expires five years after enactment or two years after the SEC determines if XBRL outweighs its costs to issuers, but no less than three years after the bill is enacted.
Exactly one year ago from January, heated debates among investors, financial analysts, the SEC and companies made several headlines. Investors and analysts claimed the SEC already allowed too many exemptions and comparing company financials would be almost impossible if such a large amount of data from such a large percentage of reporting companies was not being reported in XBRL. The SEC also claimed XBRL was instrumental in identifying patterns of possible fraud and misreporting.
In opposition, the smaller companies claimed that the cost for XBRL conversions were too large for start-ups within the first five years because the alleged annual cost of XBRL was $10,000, although Edgar ® Agents’ fees are far lower than this. Nevertheless, one year later, the issue is still a concern and the bill has been placed on the Union Calendar for further consideration.
Read the full bill here.
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