SEC's Dilemma

So... we know that Section 408 of the Sarbanes-Oxley Act of 2002 mandates a 33% review of all US publicly traded companies. Current estimates for reviews is somewhere south of 15%.

The shortfall cannot be met with current organizational and technical systems. And the shortfall canot be met by beefing up manpower at the SEC - it is humanly impossibly for the SEC therefore, to meet their obligations to Congress based on their current trajectory.

So... we also know there are new regulatory rules that require companies to file their quarterly reports within 60 days after the period's end. We also know that over 40% of US Multinationals would be unable to meet this deadline.

The shortfall cannot be met with curent organizational and technical systems.

So... we know that despite the worst corporate debacles in history and some of the highest litigation suits filed for improper disclosure in the last 5 years, the SEC stabs at the root cause but hesitates to institutionalize change.

It appears the SEC wants the market to do the walking, testing the market acceptance of XBRL through the Voluntary Filing Program (VFP), encouraging software vendors to provide effective tools and services to help in the transition to XBRL, and then judge the degree of complacency to transparency and then decide on whether a mandatory edict to tagged filing via XBRL is necessary.

As someone recently lamented, the regulators have to walk a fine line -- steering between a Panglossian view of the markets and the Nirvana fallacy that regulation is appropriate whenever markets fail.