EDGAR gets Web fever

New rules at the Securities and Exchange Commission place the Internet at

the center of a plan to upgrade EDGAR, the 16-year-old automated system

for receiving, processing and publishing corporate filings of publicly held

companies.

Companies will now be able to use the Internet to transmit HTML files — complete with graphics — to EDGAR (the Electronic Data Gathering, Analysis

and Retrieval system). They will also be able to include hyperlinks to previously

filed documents in the EDGAR database. Richard Heroux, program manager for

EDGAR, said the changes offer significant improvements over the previous

system. For one thing, HTML is a much better presentation format than the

previous file format, ASCII text, he said.

The changes will also eliminate at least one step in the submission

process. Filers now must prepare their forms in one format and then convert

them to ASCII for transmission to EDGAR.

"We wanted to eliminate that [step] by moving to a better format so

they can push a button, spit out an HTML document and send that to us,"

Heroux said.

Since last June the SEC has permitted companies to file in HTML, though

without images or hyperlinks. Companies have also been able to submit unofficial

documents in Adobe Systems Inc.'s Portable Document Format.

With the new Internet filing option, companies upload their files to

an internal EDGAR system, according to Heroux. The agency then uses that

data to update the Web site and make the documents available to the public.

To secure the company filings via the Internet, the SEC is using company

log-ins, passwords, certification and a secure tunnel for transactions.

"We're using Internet best practices for our security PKI [public-key infrastructure],"

Heroux said. "It's the same as a lot of online banking companies use."

Heroux said the agency has no estimates of how many filers will use

the Internet for their reports, "but we think people will try it," he said.

"A lot of people have been clamoring for this, but there is still a

desire for people to use the dial-up line," he said. "We'll keep both for

awhile and adjust accordingly. We have enough capacity in both areas to

adjust."

Also, after Jan. 2, 2001, the SEC will no longer require companies to

file Financial Data Schedules, which are exhibits to the 10-K and 10-Q forms

that are not subject to the same regular accounting standards.

Companies were preparing the schedules by extracting information from

their other audited filings according to a detailed tagging scheme required

by the EDGAR system. Often, administrative staffs, not accountants, prepared

them, so mistakes were common, the SEC found.