For years now, the SEC has been touting the promise and potential of Extensible Business Reporting Language, or XBRL, which allows companies to electronically communicate their business and financial data to investors. Supporters say XBRL will revolutionize the financial reporting process by lowering costs and increasing accuracy and efficiency.

Now, it appears the move toward XBRL is gaining momentum. SEC Chair Christopher Cox says XBRL tags have been developed for the entire system of U.S. generally accepted accounting principles (GAAP).

“The use of the tags makes it possible for investors, analysts and others to download financial reports … directly into spreadsheets in Excel and other popular software, and to use other Web tools and specialty software to do instant financial comparisons across entire industries,” the SEC says, adding that it has “committed to transform its vast database of financial information, nicknamed EDGAR, into interactive data format.”

The news may be more than a mere technological step forward. In an online editorial, WebCPA Editor-in-Chief Michael Cohn says that, ready or not, the day may soon come when filing one’s financial reports via XBRL is a requirement.

While acknowledging XBRL’s benefits, Cohn writes, “Relatively few companies joined the voluntary program the SEC introduced two years ago and it’s going to take some prodding and a lot of handholding to get them to convert their financial systems to XBRL. Accountants are going to be kept very busy working out kinks in the new system.”

What do you think? Is the world of financial reporting ready for an XBRL mandate?