XBRL's Potential Fallout

3:30 PM -- Does corporate America need yet another compliance pressure? (See Compliance Remains Elusive Target, Top Tips for Compliance , and In Search of Storage Skills.) Whether you like it or not, one is on the way.

After years of SOX stress and HIPAA hassles, it looks as if there will be no regulatory respite for IT managers. The Securities and Exchange Commission (SEC) is now pressing the financial sector to use the Extensible Business Reporting Language (XBRL) format for their regulatory filings as part of a long-term effort to improve data sharing. (See Wall Street Gets Set for XBRL.)

The effort could have unpredictable effects on U.S. firms.

Speaking at a Wall Street technology event in New York this week, Jim Northey, principal of consulting firm The LaSalle Technology Group, warned that there is only so much compliance that the U.S. can stomach. "I understand why the SEC wants to do this, there are good reasons behind it, but these kind of [compliance] costs are driving capital markets offshore," he said.

America's loss is the U.K.'s gain, according to Northey. "[London's] Canary Wharf should build a statue to Sarbanes and Oxley because so much business has gone over there," he added.After sitting through a sizeable chunk of the WorldCom trial live, I am all in favor of anything that improves financial reporting and helps the Feds nab the bad guys. (See Ebbers Trial: The Jury Is Out, Ebbers Sentenced: See You in 2030, and WorldCom's Sullivan Gets Five Years.)

That said, efforts such as XBRL should be pushed forward very carefully at a pace that will not cause coronaries in boardrooms and data centers. After all, if more and more firms shift their data centers overseas, there may be no one left to regulate.

James Rogers, Senior Editor Byte and Switch