House bill would repeal open data requirements in financial reporting

The House passed a group of five bills Feb. 3 that includes a measure to allow public companies with annual revenues of under $250 million to opt out of filing financial information with the U.S. Securities and Exchange Commission in machine-readable XBRL format.

The bill "provides a voluntary, I repeat, voluntary exemption from reporting an XBRL data format for emerging growth companies and smaller, public companies, the cost and use of which have continually been questioned in our committee," said Rep. Jeb Hensarling (R-Texas), chairman of the House Financial Services Committee.

Opponents of changes to the filing requirement argue that by allowing companies to opt out of reporting machine-readable data to the SEC, the bill will decrease financial transparency.

"This bill would exempt over 60 percent of public companies from using a computer-readable format known as XBRL in their SEC filings," Rep. Maxine Waters (D-Calif.) said. "According to the SEC's investor advocate, this exemption 'seriously impedes the ability of the SEC to bring disclosure into the 21^st century.'"

Rep. Darrell Issa (R-Calif.), a leading open data advocate on the Hill, offered an amendment that would limit the exemptions allowing small companies to choose not to report financial data in a machine-readable format.

"From my information and from my experience, it is a de minimis cost to simply include a digital format that the world can look and evaluate quicker and with greater accuracy," Issa said.

Committee member and cosponsor of the bill Robert Hurt (R-Va.), however, remained concerned that the cost of using the XBRL format could hinder small companies. Hurt said he was unconvinced that XBRL is actually "useful" in analyzing public companies.

"If this XBRL format and process is not ready for prime time…then we ought to also give relief to those who are currently having to do it and would like not to do it," Hurt said. "[Issa's] amendment goes at the very essence of the underlying measure and would not substantively provide any relief to small companies that are currently being negatively impacted by this failed XBRL system."

Issa's amendment failed on a 194-221 roll call vote.

Though the bill passed the House, the Obama administration has released a statement saying it would veto the measure if it reached the president's desk.