The U.S. Securities and Exchange Commission voted Thursday to adopt and propose several new rules, including changes to the SEC’s whistleblower program and a requirement to use Inline XBRL in certain filings.
The amendments to the extensible business reporting language (XBRL) requirements, which will go into effect in phases, require the use of Inline XBRL for operating company financial statement information and mutual fund risk/return summaries. The amendments also eliminate the requirements for companies and funds to post XBRL data on their websites.
Inline XBRL involves embedding XBRL data directly into the filing so that the disclosure document is both human-readable and machine-readable. While the amendments modify existing XBRL requirements, they do not change the categories of filers or scope of disclosures subject to XBRL requirements.
The XBRL decision comes less than two years after the SEC voted to allow companies to voluntarily file structured financial statement data in Inline XBRL. SEC rules have for years required companies to provide XBRL data as an exhibit in their filings, including annual and quarterly reports. The development of Inline XBRL technology has allowed for the integration of XBRL-structured data within HTML filings.
The SEC sees Inline XBRL as having the potential to reduce filing preparation costs while also enhancing the quality of XBRL data and increasing its use among investors.
The AICPA issued a statement praising the new Inline XBRL requirement.
“We wholeheartedly support the continuing effort to improve the quality of information disclosed and allow for the information to be collected in the most timely and cost-effective manner possible, while increasing the utility of XBRL data,” AICPA President and CEO Barry C. Melancon, CPA, CGMA, said in the statement.
The XBRL requirement for companies will begin to phase in next year, as follows:
- Large accelerated filers that use U.S. GAAP will be required to comply beginning with fiscal periods ending on or after June 15, 2019.
- Accelerated filers that use U.S. GAAP will be required to comply beginning with fiscal periods ending on or after June 15, 2020.
- All other filers will be required to comply beginning with fiscal periods ending on or after June 15, 2021.
- Filers will be required to comply beginning with their first Form 10-Q filed for a fiscal period ending on or after the applicable compliance date.
More details on the Inline XBRL rule and phase-in for funds can be found in this SEC news release.
Proposed whistleblower rule amendments
The SEC voted to propose the first amendments to the rules governing the whistleblower program the commission established in 2010. The proposed rules would provide the SEC with “additional tools in making whistleblower awards to ensure that meritorious whistleblowers are appropriately rewarded for their efforts, increase efficiencies in the whistleblower claims review process, and clarify the requirements for anti-retaliation protection under the whistleblower statute.”
Since the whistleblower program’s inception, the SEC has approved more than $266 million in 50 awards to 55 whistleblowers, including individuals filing jointly, who provided information and cooperation that assisted the SEC in bringing successful enforcement actions. For more information, see the SEC news release on the whistleblower rule proposals.
Other SEC actions
The SEC on Thursday also approved:
- Adoption of amendments to modernize the definition of “smaller reporting company,” which was established in 2008.
- Adoption of amendments related to disclosures of liquidity risk management for open-end funds, which were proposed earlier this year.
- A proposal that would permit certain exchange-traded funds (ETFs) to operate without first obtaining a fund-specific exemptive order from the commission, which is a process that has not changed since the first ETF was approved in 1992.
More details on the above rules can be found via the main SEC news release.
— Jeff Drew (Jeff.Drew@aicpa-cima.com) is a JofA senior editor.