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By | Gavin Clarke 1st August 2007 09:44

Microsoft joins options reformfest

Automate to simplify

Microsoft has joined a handful of US companies on a government program looking to overhaul financial reporting in the wake of the stock options scandal.

The software giant's chief financial officer, Chris Liddell, was today named as a member of the Securities and Exchange Commission's (SEC) Advisory Committee to Financial Reporting, due to convene this Thursday.

The group's remit is to simplify reporting of "complex financial data" using eXtensible Business Reporting Language (XBRL), the XML schema for financial analysis and reporting.

Microsoft is the only significant tech company on board, despite the fact XBRL was hammered out by others including Oracle, IBM, and Hyperion. Consultants Deloitte & Touche, also an XRBL author, is also on the committee.

Participation is fortuitous for Microsoft, given XBRL features in its Office products. Membership is dominated by financial services representatives.

The SEC has acted because it said financial reporting has become more complex with investors expressing concern over the difficulty in understanding their company's financial reports. Companies, meanwhile "have expressed concerns that it is difficult to ensure compliance with US GAAP and SEC reporting rules when preparing financial reports."

The regulator claimed almost 10 per cent of public US companies had to restate prior reports "due to discovery of errors in those reports".

What the SEC didn't mention was that a number of companies restated following internal investigations of misallocation of stock, with the SEC breathing down their necks over potential breaches of existing rules.

Those announcing restatements so far include Apple, BEA Systems, Juniper Networks, and Verisign. Microsoft, itself in 2003, restated the previous two years' results as it moved to granting staff stock rather than options.

"These new technologies [interactive data and XBRL] can help address accounting complexity by making financial information more useful to investors and others who use it," the SEC said in a statement.

Embracing "new technologies" this week was Sun Microsystems, which - after months of lobbying SEC chairman Christopher Cox - got the OK to broadcast its quarterly results via RSS feed and through its website, in addition to the usual routes of filings and calls with Wall St investors. ®

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