Understanding Inline XBRL

Transcription

1 ebook Understanding Inline XBRL What the SEC s Proposal to Mandate ixbrl Filings Means to You On March 1, 2017, the Securities and Exchange Commission (SEC) published a proposed rule that would mandate Inline extensible Business Reporting Language (ixbrl) filings.

2 Following a 60-day comment period that ended on May 16, 2017, the SEC is expected to publish a final rule. Mandating the use of ixbrl is intended to improve the quality and accessibility of data submitted by public companies and mutual funds. In addition to requiring information to be submitted in ixbrl, the new rule would eliminate the requirement that filers post XBRL data to their websites. The SEC listed several potential benefits from this change, including: 1 ixbrl allows filers to embed XBRL data directly into their filings instead of including them as attachments, reducing the likelihood of inconsistencies. 2 ixbrl would give the preparer full control over the presentation of XBRL disclosures within the HTML filing. 3 Tools like the open-source Inline XBRL Viewer on SEC.gov can be used to review the XBRL data more efficiently. The current proposal calls for companies to phase in ixbrl submissions over a three-year period. Although the SEC has been collecting XBRL data since 2009, the Commission has not used that data as often as it might, in part because of known quality issues with XBRL corporate filings. The perceived lack of use has frustrated issuers, regulators, and some members of U.S. Congress alike. The goal of mandating financial statement submissions in ixbrl is that data provided by public companies will be of a higher quality and therefore much more widely used by regulators, investors and analysts. So, what is ixbrl? Inline XBRL or ixbrl is an international standard that merges machine-readable business reporting data into a human-readable HTML document, producing an HTML document with XBRL tag information embedded.

3 Solves the HTML/XBRL dilemma HTML and XBRL are both offshoots of XML-based standards, but each has limitations that ixbrl aims to address: HTML HTML allows users to render data into any Internet browser, but it is not readily machine readable without human intervention to read, copy and paste, or to retype the information into any system. XBRL XBRL, which is machine readable, allows automatic data exchange, validation and analysis, but is not human readable. ixbrl Inline XBRL is yet another offshoot of XML, but is capable of reconciling HTML and XBRL data standards. Therefore, ixbrl makes traditional XBRL information readable from any web browser, just like an HTML document. Inline XBRL is managed by XBRL International, which is following the global Inline XBRL Technical Standards and Specifications. The technical specifications of the ixbrl standard are complicated. To simplify, users can think of ixbrl as a system that will allow the transition of financial reporting from documents to a data stream and back again. While ixbrl is machine readable, the HTML format and ixbrl viewers make it easier to review how the XBRL has been tagged in line with the source content. Makes the technical less techy With ixbrl, highly structured streams of content can be viewed through a web browser and recreated as descriptive narratives that anyone can read and digest. In a March 29, 2016, presentation, Mike Willis, Assistant Director of the SEC s Office of Structured Disclosure, unveiled the Commission s Inline Viewer Prototype which allows ixbrl submissions to be easily read and understood. What s more, the SEC has regularly said that ixbrl has the potential to provide benefits for companies and for those using the information provided in ixbrl. Among these benefits: Lower filing preparation costs Higher quality data More structured data

4 By improving data quality, the SEC hopes to increase the use of XBRL data by investors and other market participants. What ixbrl means for issuers For issuers, ixbrl represents a move towards greater simplicity. Replacing complex financial reporting with ixbrl means that only one piece of reporting will be required. The shift to ixbrl might be particularly important for smaller companies and filers that use standalone software solutions and currently have to input data manually. With ixbrl they will no longer have the headache of maintaining both XBRL and HTML versions of filings, or of keeping track of late-breaking changes in two separate versions. Commenting period Recognizing that the transition to ixbrl may be more difficult for smaller companies, the SEC opened up commenting on the transition for a 60-day period. While XBRL technology has made disclosures easier to access for investors, there are legitimate concerns about the burdens smaller companies face when preparing their filings, SEC Acting Chairman Michael Piwowar said. He added that inviting comments serves as a way to streamline this process to ensure usability for the public while keeping compliance costs down. While XBRL technology has made disclosures easier to access for investors, there are legitimate concerns about the burdens smaller companies face when preparing their filings. The good news for all issuers, though, is that the hard work involved in changing to ixbrl will take place behind the scenes. Disclosure management systems will essentially provide users with the ability to generate a variety of outputs, including documents formatted in ixbrl. ixbrl in action The SEC began accepting financial statements prepared according to International Financial Reporting Standards (IFRS) for foreign filers in With a dramatic reduction in the number of permissible tags, clarity will begin to increase. The quality of the submissions using IFRS with ixbrl could create more interest in accelerating the convergence of U.S. GAAP and IFRS accounting standards. Donnelley Financial Solutions believes that issuers who want to prepare for ixbrl and other changes that lie ahead should adopt as simple a model as possible.

5 The backbone of our solution for corporate reporting is incorporating the SEC and FASB guidelines, running numerous validation rules, and catching errors. Taking steps now will ease the transition when the SEC s mandate of ixbrl and the new standard for EDGAR filings goes into effect. Other countries benefiting from ixbrl Perhaps the best way to predict the effects of an ixbrl requirement is to look at successful implementations currently under way in other countries. Australia has already adopted ixbrl across all of its agencies, as has the Irish ROS (tax authorities). What s more, HM Revenue and Customs Service (HMRC) in the United Kingdom mandated ixbrl submissions beginning in 2011, and is now reaping the benefits. For more information The SEC s press release is available here: For further information or updates on ixbrl, please contact your Donnelley Financial Solutions sales representative, or visit our website at Donnelley Financial, LLC. All Rights Reserved. 35 West Wacker Drive Chicago, IL