09 Jan House Fails to Pass XBRL Exemption for Smaller Companies

In a celebratory moment for financial printing companies, the House of Representatives this week failed to re-pass a comprehensive business package that included an exemption from XBRL financial reporting for smaller companies. The House had overwhelmingly passed the same bill in November before the new Congress settled in. Since the bill never passed the Senate, the new House has to pass it again, but failed.

It is not clear what politics are at work given that there was pretty wide bi-partisan support for the bill last fall, but some say the Republican effort to push the bill through without debate or committee consideration was simply unacceptable for the Democrats (led by Nancy Pelosi, Maxine Waters and Elizabeth Warren) and Republicans couldn’t get a two-thirds vote done to suspend rules and have a vote on the bill.

As we know, the SEC has been requiring “apples to apples” financial reporting of key line items for a number of years. Smaller companies have complained that the cost of compliance is significant compared to the limited benefit. Larger companies are followed by analysts who appreciate the ability to more easily compare competitors in the same space, but most smaller companies do not have analyst coverage. Unfortunately this was wrapped up in a larger package that the Democrats fought down. Maybe the XBRL exemption will have another day.