Adding XBRL tags to financial disclosures makes them searchable and much easier to compare. What used to be available only to financial professionals now will be easily accessible to anyone with an Internet connection. Investors, and regulators, in theory, will be able to analyze data faster and more easily, and possibly finding anomalies in corporate financial statements and investments.

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The new rule, while not necessarily helping SEC and investors uncover problems that led to the collapse of the financial industry or discover investment fraud such as that allegedly perpetuated by Bernard Madoff, will improve financial analysis. To do so, XBRL would have to be applied to filings on all types of securities, including asset-backed securities and collateralized debt obligations.

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The move will bring the United States into alignment with worldwide practices, said Diane Mueller, a member of the XBRL international steering committee and vice president of XBRL development at software vendor JustSystems.

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Currently, financial disclosure records that public companies and mutual funds file are large, unwieldy documents often thousands of pages long. Only large financial institutions have been able to devote the time and staff necessary to parse through the documents and glean the most pertinent information and figures for analysis.

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The adoption of XBRL, however, is likely to significantly change the way companies are analyzed. The addition of data tags will allow software to instantly comb through reports and identify the most critical information and figures. XBRL “makes for much easier and timely comparisons between companies,” Moyer said. “Today it’s extraordinarily difficult for investors to compare between balance sheets of two banks. They have different reporting styles, etc. [XBRL] starts to conform balance sheets and give you more comparability.”

Another advantage of XBRL for the commission is regulators will know instantly if a company’s filing is missing any key information because the software will automatically identify what data is missing when corporations electronically file documents and then notify the company and SEC. Previously, regulators had to manually check files to find missing information, Mueller said.

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