The third phase of the SEC’s XBRL implementation program takes effect June 15, with nearly all public companies using U.S. GAAP now required to submit data in the fully searchable, digital format.
Over the past two years, the largest SEC reporting companies have begun submitting financial information in XBRL. The first phase, which took effect in 2009, required companies with a worldwide public equity float of $5 billion to file in XBRL; the second phase, for the next-largest tier of public companies, took effect in 2010.
XBRL allows computers to read financial information and use it in analytical tools, much like barcodes applied to merchandise are used for computerized inventory controls. In order to create an XBRL submission, filers must select tags from the U.S. GAAP taxonomy that best represent their financial reporting concepts.
The selected tags are then attached to the filer’s financial information by software programs or third-party service providers to complete the XBRL submission. XBRL helps to provide investors access to financial information in a form that’s ready for analysis and can help companies automate checks on the data quality in their reports. In addition, XBRL has helped companies enhance and streamline their reporting process. More and more companies are realizing this benefit and, as a result, there is demand to adopt XBRL across other reporting streams. Two bills currently are pending in the U.S. Congress – S. 904 and H.R. 1745, the Jobs, Opportunity, Benefits and Services Act of 2011 – that designate data reporting standards such as XBRL be used for the reporting of certain information under the Social Security Act.
In a company’s first year of XBRL compliance, each amount in the primary financial statements is tagged in XBRL, and each note to the financial statements and certain financial schedules is individually tagged as a block of text. In the second year of compliance, more detailed information is required, including: each accounting policy, each table and each amount in the notes and financial schedules also must be tagged separately in XBRL.
The only companies the XBRL rules do not apply to are investment companies registered under the Investment Company Act, business development companies and other entities that report under the Exchange Act and prepare their financial statements in accordance with Article 6 of Regulation S-X, according to the SEC. In addition, since the SEC has not yet approved the taxonomy for foreign private issuers that report under IFRS, these companies will not be required to submit XBRL exhibits.
For new XBRL filers, the rules include two permissible grace periods: a 30-day grace period for a company’s initial, basic tagged submission and, in the following year, a 30-day grace period for a company’s initial, more detailed tagged submission. The rules also include modified liability provisions for the first two years a company is required to provide XBRL submissions. The modified liability provisions are eliminated on Oct. 31, 2014.
For more information on XBRL filing, see the final rule on the SEC’s website, visit xbrl.org/us or see the EDGAR Filer Manual.
For additional resources, visit the AICPA’s XBRL resource center. This site includes links to additional articles, webcasts, events and other helpful information.
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