Bills
| 3.23.22

Do Small Businesses Need to be Exempt from Using a Particular Financial Reporting System? (H.R. 1965)

Do you support or oppose this bill?

What is H.R. 1965?

(Updated July 19, 2017)

This bill would exempt emerging growth companies and issuers with total gross revenues of less than $250 million from requirements to use Extensible Business Reporting Language (XBRL) for financial statements and other mandatory reports filed with the Securities and Exchange Commission (SEC).


Companies that are exempted under this legislation would be able to use XBRL voluntarily for their mandatory reports.


The SEC would be directed to:

  • Analyze the costs and benefits to entities issuing requirements to use XBRL for financial statements and other mandatory reporting.

  • Report to certain congressional committees on the results of such analysis, as well as on progress in implementing XBRL reporting within the SEC, and use of XBRL data by the SEC and investors.

Argument in favor

Small companies need more flexibility when it comes to reporting requirements, and allowing them to opt out using a certain standard of business reporting software helps them save both money and time.

Argument opposed

Using XBRL reporting for financial statements is a valuable tool for businesses of all sizes as it creates a common standard -- all businesses should have to use it in making SEC filings.

Impact

Emerging growth companies with revenues totalling less than $250 million annually, the SEC, Congress.

Cost of H.R. 1965

A CBO cost estimate is unavailable.

Additional Info

In-Depth: This bill was passed by the House Financial Services Committee by a vote of 44 to 11.

Sponsoring Rep. Robert Hurt (R-VA) called his legislation:

“A commonsense solution that will ease the regulatory burden for smaller public companies and require the SEC to perform a cost-benefit analysis on the regulations’ impact on these companies.”


Of Note: XBRL is a type of business reporting software that standardizes financial statements so they are easier to analyze. It has been required by the SEC to be used in filing mandatory financial statements and other reports since the SEC’s final rules on XBRL were published in 2009.

According to Ernst & Young, XBRL regulatory reports provide several benefits, including increased accuracy, reduced reporting burden, and improved flexibility.


Media:

Summary by Eric Revell
(Photo Credit: Flickr user Twinfieldinternational)