The U.S. Securities and Exchange Commission has voted to require public companies and mutual funds to use interactive data for financial information, the SEC said Thursday.

With interactive data, all of the facts in a financial statement are labeled with unique computer-readable ”tags,” which function like bar codes to make financial information more searchable on the Internet and more readable by spreadsheets and other software, the SEC says.

Investors will be able to instantly find specific facts disclosed by companies and mutual funds, and compare that information with details about other companies and mutual funds to help them make investment decisions.

For public companies, interactive data financial reporting will occur on a phased-in schedule beginning next year. The largest companies who file using U.S. GAAP with a public float above US$5 billion will be required to provide interactive data reports starting with their first quarterly report for fiscal periods ending on or after June 15, 2009. This will cover approximately 500 companies.

The remaining companies who file using U.S. GAAP will be required to file with interactive data on a phased-in schedule over the next two years. Companies reporting in IFRS issued by the International Accounting Standards Board will be required to provide their interactive data reports starting with fiscal years ending on or after June 15, 2011.

Companies will be able to adopt interactive data earlier than their required start date. All U.S. public companies will have filed interactive data financial information by December 2011.

Mutual funds will be required to begin including data tags in their public filings that supply investors with such information as objectives and strategies, risks, performance, and costs in 2011. A mutual fund also would be required to post the interactive data on its Web site, if it maintains one.

The SEC says that the use of interactive data has the potential to increase the speed, accuracy and usability of financial disclosure and eventually reduce costs for investors. “Interactive data will help provide investors with the information they need, rather than just a warehouse of forms on which they can try to find it,” said SEC chairman Christopher Cox. “Interactive data will enable new analysis tools to put key information at every investor’s fingertips within seconds, exactly as the investor wishes to see it.”

IE