SEC Alert: Replacement of EDGAR with the IDEA System

The SEC has recently announced plans to replace the EDGAR system, its document filing database system, with a new system known as IDEA, which is short for Interactive Data Electronic Applications. The IDEA system is intended to give investors faster and easier access to key financial information about public companies and mutual funds.

According to the SEC, the IDEA system is based on a completely new architecture being built from the ground up that will at first supplement and then eventually replace the EDGAR system. The decision to replace EDGAR marks the SEC’s transition from collecting forms and documents to making the information itself freely available to investors to give them better and more up-to-date financial disclosure in a form they can readily use.

Currently, most SEC filings are available only in government-prescribed forms through EDGAR. Investors looking for information must sift through one form at a time, and then re-keyboard the information.

In contrast, IDEA utilizes the interactive data technology known as XBRL, or eXtensible Business Reporting Language, which incorporates digital tags to enable investors to identify and extract data in SEC filings. In May 2008, the SEC proposed rules that would phase-in mandatory XBRL-tagging of financial statements in Securities Act and Exchange Act filings, initially beginning with filings by certain “large accelerated filers” containing financial statements for fiscal periods ending on or after December 15, 2008. For more information about the proposed XBRL rules, please see our SEC Alert dated June 4, 2008 entitled “Use of XBRL in Financial Statements.”

With IDEA, investors will be able to collate information from thousands of companies and forms, and create reports and analysis in any way they choose. IDEA will ensure that both the SEC and the investors who rely upon financial reporting are ready to utilize financial information presented in interactive data format.

Companies’ interactive data filings are expected to be available through IDEA beginning late this year.

Companies making SEC filings using EDGAR will continue to do so through 2008. Companies and investors who currently use EDGAR will be able to continue doing so for the indefinite future. During the transition to IDEA, companies and investors will be able to take advantage of new interactive, IDEA-like features that will be grafted onto EDGAR in the short run. The EDGAR database also will continue to be available as an archive of company filings for past years.

By Steve Kronengold and David C. Zuckerbrot. © August 2008. All rights reserved.
This article is provided for educational, informational and non-commercial purposes only. The content of this article is not intended to provide legal advice on any subject matter and should not be relied on as such.

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