Thursday, October 9, 2014

House Resolution 5405 which was passed by the House of Representatives earlier in September, contains a passage that would exempt “small” firms from filing their financials in eXtensible Business Reporting Language (XBRL).  

Some Q & A:

Q:  What is the definition of small?  

A:  According to this legislation, a ‘small’ company is one with annual revenues of less than $250 million, despite the fact that many such companies have assets well over $1 billion.  

Q: How many firms would be exempt under this proposed legislation?

A:  In 2013, there were 2,700 entities that reported revenue greater than $250 million.  There were 4,280 who reported revenues less than $250 million.  These firms would be exempt!  

Q:  What are the costs related to XBRL as compared to the other costs associated with being a public company?

A: XBRL costs vary with the complexity of the statements being prepared. However, budget conscious companies see a bill between $50 and $100 thousand a year.  Compare that to the $2.1 BILLION in investment banking and legal fees paid in 2013 by these 4,280 companies, just for stock issuances alone!

Q:  Anything else??

A:  Why yes, exempt firms would include some household names like E-Trade, and Solarcity, a $5 billion market cap firm! Does anyone consider these to be small companies?

 

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