Public Info, Faster and Easier

Two SEC staffers write that XBRL is easy to implement and will bring benefits to companies and investors. More letters to the editor: meritless benzene suits, SAS-70 superiority, hidden energy costs, and why leasing is beneficial.


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Please include your full name, title, company name, address, and telephone number. Letters are subject to editing for clarity and length.

We write in response to Alix Nyberg Stuart's insightful piece on interactive data ("XBR-what?" August). Based on the comments at the Securities and Exchange Commission's June roundtable, we share the author's view that companies filing their financials in XBRL may see increased attention from securities analysts. Analysts with extensive experience on both the buy-side and the sell-side reported that receiving interactive data directly from the reporting companies, without the need to re-key numbers into their spreadsheets, would save time and effort, making it easier to cover more companies.

Your article further reports that companies preparing XBRL filings have encountered only minor difficulties, and that moving to XBRL is "simpler and less costly than nearly any other data-standardization effort one could cite." We have heard the same story from a range of companies furnishing their SEC filings with interactive data, and the SEC will continue to listen to test filers to fully understand the process of providing interactive data to the markets.

Faster, easier access to more information about a public company carries obvious benefits for investors large and small. Interactive data may also offer a particularly compelling alternative for a company seeking more research coverage and eager to efficiently share its story with the markets. The Commission continues to explore the potential benefits to investors of interactive data and XBRL.

We offer the usual disclaimer that we speak only for ourselves and not for other SEC staff or commissioners.

James Freeman

Investor Advocate

Brigitte Lippmann


U.S. Securities and Exchange Commission

Via E-mail

Toxic Torts

I am a physician/toxicologist who has been actively involved in toxic tort matters for 30 years ("Problem Solvent," August). The benzene issue is like many we have seen before-extraordinarily low doses of a potentially dangerous agent allegedly causing a serious or fatal disease. The ubiquitous nature of benzene provides an endless source of defendants for these generally meritless claims. They must, however, be addressed with good, solid science early and intensely. Motions to dismiss with solid scientific support must be filed. Absent vigorous defense approaches, these claims will expand, lead to business failures, and be enormously costly.

Ronald Gots

Via E-mail

Further Thoughts on Dividends

Your article "Learning to Love Dividends" (Insight, August) is timely and well documented. Please let me offer some further thoughts: (1) To reward investors, share buybacks should be made at depressed prices. (2) The reinvestment of dividends drives, or compounds, accumulated wealth over time. Thus, low- or no-dividend stocks very substantially inhibit wealth- building, just as spending in excess of income does. (3) Management with its eyes on option programs has no incentive to pay dividends in the near term. This is a strong argument to employ share grants that vest over many years and to eliminate option programs. (4) One-half of all companies are below average. To make a bold statement, the lesser half should pay out all earnings every year, until their returns justify reinvestment. Were they to do so, the average dividend payout ratio would be at least 50 percent.

Robert Boyd

Via E-mail

Missing the Mark on "Missing the Mark"

It appears that your September Topline article "Checkups on Providers Miss the Mark" did not consult a CPA and used a person in a competing industry as its "expert." It's not really that surprising that a security consultant who can't provide SAS-70 audits would recommend abandoning the audit in lieu of an information-security audit.

The article's statement that "SAS-70 audits assess the internal controls, in particular the data-security controls, of outsourcing providers" is incorrect. A SAS-70 audit is not an information-security audit, and implying that data security is a focus, rather then just one of many areas reviewed, is erroneous. In fact, a SAS-70 audit is designed to assess the internal controls at a service organization that could have financial-reporting impacts for its user organizations. Such controls can vary widely, which is why it is impossible to define a set of controls that must be reviewed for every SAS-70 audit.

The article also fails to mention that the PCAOB's Audit Standard 2 has identified a type-2 SAS-70 audit as the only acceptable method of obtaining third-party verification regarding controls at a service organization. Using another standard, such as the ISO standard, would be of no use for Sarbox purposes.

Chris Schellman

CPA and SAS-70 Auditor

Via E-mail

Hidden Energy Costs

Thanks for an informative article on alternative fuel technologies and the financing and profitability problems they face ("Power Source," July).

There's one aspect of the story that's misleading, however. Comparisons were made among energy unit production costs for energy derived from fossil fuels and that from alternative sources. The unit costs for fossil-fuel energy are deceptively understated. They fail to reflect the public-health, environmental, and other costs with which their production burdens individual lives, society at large, and our planet.

This cost omission constitutes a gross accounting error. Coal production in Kentucky and West Virginia destroys lives, property, and mountain ecosystems. Power-plant emissions drive up asthma cases in children and shorten the lives of thousands of adults annually. Oil-and-gas drilling often fouls the water coming out of the taps of thousands more, and oil refining has given the Mississippi Delta region the "cancer alley" label. And collectively, the greenhouse-gas companies are a major part of the threat to billions in property values along America's coastlines. It's a fact: their products are driving warming climates and rising sea levels.

It's time that these costs showed up in the financials of their originators. Only then can we understand the energy picture — and our alternatives — accurately and completely.

Thomas C. Manning

Pendleton, South Carolina

Leasing Isn't "Gotcha" Finance

The article "(Don't) Look Deep into My Lease" (July) incorrectly portrays lease financing while obfuscating obvious facts.

The article infers that a "buyout" option at the term of a lease is unfair when the lessee seeks permanent use of the lessor's property. This ignores that the lessee originally entered into an agreement to use the asset for a fixed period of time, not to purchase it. The article further infers that only lessees need to "glance under the hood" (that is, read the documents). To assert that an equipment lease is the only financial transaction requiring thorough document review is nonsensical, particularly for a publication catering to financially savvy managers.

Were leasing and equipment finance to be a form of "gotcha" finance, it would not be a $230 billion sector providing financing for the vast majority of commercial aircraft, rail cars, IT and office equipment, and health-care assets, to name just a few.

Kenneth E. Bentsen Jr.


Equipment Leasing Association

Via E-mail


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