There are 67 days left in the year. Are you ready to meet the next Securities and Exchange Commission mandate for mutual funds?

That comes into effect January 1, when the federal regulator says mutual funds have to get interactive. Specifically, that all funds must publish their risk and return summaries in a particular computer-readable format.

With little more than two months to go, many mutual fund complexes are still facing the question of whether to handle the task in-house or job it out. One vendor, Rivet Software, says that smaller companies try to keep direct costs down by handling the task with existing staff. But larger companies, with deeper pockets, often go outside, at least initially.

The format in question is known as the eXtensible Business Reporting Language. This is a series of tags for financial documents that allow fields of data and text to be read and displayed by computers, in a consistent and comparable fashion. It's already in use for filings of corporate financial statements.

In the mutual fund case, the January 1 date is really a rolling date. Each complex has to worry about when it files its annual updates to registration statements. Whenever that is, they have 15 more days to file the interactive version of risks and returns.

This applies both to Form N-1A, which summarizes the fund's risks and returns, fees, investment strategies, objectives, holdings, management organization and structure, and Rule 497 filings, which deliver the fund's definitive materials to the SEC's EDGAR filing system.

Allow yourself two or three months to get prepared. Give yourself time to evaluate your alternatives, understand the process, establish tags and gather or convert the information from existing sources to get ready to deliver them in the XBRL format to the SEC.

No matter what, before you decide whether to handle the task in-house or hire a service, get yourself a team that you trust to help make the decision and work through the process.

"You'll need a cross-functional team, with some accounting professionals as well as some technical professionals," said Harold Zeidman, audit partner at KPMG, in a discussion of XBRL filings on the CFO Financial Forum online. "You'll want the team, regardless of whether you choose to use the assistance of an outside service provider, to assist you in preparing your XBRL exhibit."

In the mutual fund case, the task looks a lot simpler than in making corporate financial statements interactive. There are only 250 reporting elements to deal with in the taxonomy for mutual fund summaries, compared to 17,000 elements in the taxonomy for financial reporting by public companies.

This ultimately should benefit mutual fund investors and managers, according to Guy Stanzione, SEC compliance services manager for Merrill Corporation, a provider of tagging, filing and publishing services for interactive documents.

"You're going to be able to draw true comparisons" between different funds, he contends, as opposed to public companies.

Software like that which Merrill supplies can make it easier to create the interactive files that must be published 15 days after updates to registration statements are made.

For instance, one field has to be created that summarizes the details of any minimum investment that must be made in a fund. There can be "expense breakout discounts," such as a cap on expenses paid once a particular "minimum" threshold has been reached.

All this is described in words. But if the threshold for the discount (or cap) is a minimum of $50,000, the software can extract that figure from the text in the one field and place it in another required field that sets out just that number.

The question on insourcing versus outsourcing the tagging, filing and publishing tasks boils down, in his view, to whether a company wants to spend the money. The money not just to train staff up front, but to retrain staff as taxonomies change, to add or supplement staff as needed and to keep up to date with all changes made, over time, by the SEC, in its requirements.

This may not seem so difficult if a firm has five or fewer funds. But, when you get dozens or 50 or 100, the difficulty of keeping up "goes up exponentially,'' according to Jenny Ceschetti, Merrill's product development manager.

Merrill's system, which is provided online as a service, keeps track of every change in tagging; can convert financial data stored in the SEC's EDGAR filing system into XBRL format for reuse in the summary reports and also keeps track of comments made in the process of tagging and creating the XBRL files, so there is an audit trail.

Ceschetti says 40% of the existing, new or prospective clients that Merrill has talked to have decided how they're going to proceed with handling the SEC's mandate. But 60% are still putting their heads around the decision.

But it does not have to be a binary decision. Rivet Software, for instance, allows customers another choice.

They can license just its Crossfire software, which is online, and handle the tagging, filing and publishing themselves.

Or they can hire Rivet to handle the three pieces of the process, for them.

Or...they can do both.

In the period when corporations were getting used to tagging, filing and publishing their financial statements in the XBRL format, 80% decided to hire Rivet in the first year to handle the processes for them. They would work alongside Rivet, watch how it was done, learn-and then take it over, said Raul Varela, vice president of strategic partnerships at Rivet.

Smaller funds, he says, tend to try to handle it themselves for cost and control reasons. Larger funds have more flexibility.

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