by Anuradha | June 21, 2016
On June 13, 2016, the US Securities and Exchange Commission (SEC) announced its plans for Inline XBRL (also called iXBRL) filings. The SEC has opened up an option for companies to start voluntarily filing their financial statements in Inline XBRL.
Inline XBRL is simply a computer-readable and viewable document which isnt miles away from a PDF, except that it is viewed in a browser. An iXBRL document is a well-formatted HTML file with the XBRL information embedded beneath. Inline XBRL hides the technical jargon of XBRL and presents the user with a document that completely resembles the source document before XBRLization.
With the notice on voluntary filing in iXBRL, the SEC has announced its intention to explore its advantages further. And if iXBRL proves itself on improving data accuracy and usage, it could even be here for the long haul. Keeping this in mind, we have come up with a list of 10 important points filers need to know about this new ruling and how they can upgrade their filing process /system to meet it.
On June 13, 2016, SEC told US listed companies that they can file their quarterly and annual financial statements in Inline XBRL.
The XBRL filing was mandated by the SEC in 2009 for submission of financial statement data in structured format increasing transparency and accountability in reporting. However, companies have since been filing the quarterly reports (10-Q) and the annual report (10-K) in dual formats EDGAR-compliant HTML format (for viewability) and XBRL (for making data processable). Additionally, mutual fund entities are also required to file their Risk-Return summaries in both these formats.
With this move, the SEC is headed in the direction of replacing the dual filing requirement with one that serves both purposes. The SEC will now start accepting submissions in inline XBRL format and the entire EDGAR systems and filing rules will be revised to cater to inline XBRL filings.
This is a welcome move and one that we had anticipated.
Primarily, the forms that cover financial statement data or were earlier covered under the XBRL submission mandate can now be filed with the SEC in Inline XBRL.
The SEC order only pertains to the file format in which it will now start accepting submissions. The tagging scope and rules to be followed remain the same. The only difference is that an Inline XBRL document has to be generated and filed instead of an XBRL document.
Yes. The tagging rules and disclosure requirements remain intact. The company extended taxonomy is to be filed along with the inline XBRL document.
However, we do expect that the number of extensions would come down gradually. The inline XBRL document renders the financial statements as per the source HTML and hence the extensions which were earlier needed to match the HTML and XBRL outputs will no longer be needed.
The current dual process of document creation - getting the EDGAR-compliant HTML and XBRL generated, will be significantly impacted. With Inline XBRL, there is only one report that needs to be filed along with the company extended taxonomy.
In fact, if you are already using an inline XBRL compliant, single-source disclosure management platform such as IRIS CARBON®, there wouldnt be any change to your existing document creation processes.
No. Inline XBRL tagging doesnt require any change in taxonomy or information that is to be tagged. Hence, any automated process such as analysis based on XBRL reports will not get affected.
However, you may need software to extract the XBRL data from Inline XBRL files. In the voluntary filing period, the SEC will make the extracted XBRL data available for use wherever an inline XBRL report is filed.
The syntax of an iXBRL document needs to comply with the Inline XBRL 1.1 specification. Additionally, the EDGAR Filing Manual includes certain rules for creating HTML, usage of certain HTML tags, HTML attributes, attachment type etc. These technical syntax and requirements need to be complied with for creating a valid iXBRL document.
IRIS CARBON® creates inline XBRL documents which are compliant with the SECs EDGAR Filing Manual and Inline XBRL specification.
Inline XBRL documents can be viewed on any browser where visible information as per the source document can be seen as is. However, if you want to view the facts that are tagged along with their XBRL properties, specialized software will be needed. Such software can be in the form of add-ins to the browser or inbuilt within the software used for creating inline XBRL documents.
The SEC is planning to update the EDGAR system to enable viewing of inline XBRL documents with embedded tags.
No. Companies have been given the option to voluntarily file inline XBRL for a limited period of 4 years. In case the SEC decides to mandate the use of inline XBRL after the voluntary filing period, this time can be used as a gestation period for the transition. The SEC may also ignore initial hiccups in inline XBRL reporting during this voluntary filing period and companies can use this as an opportunity to prepare for the mandatory filings. This will also allow companies to strengthen their internal processes and gain early benefits from the use of inline XBRL.
Though voluntary up to March 2020, inline XBRL filing could become mandatory after that. The early upgrade to iXBRL will not only provide you with an edge but also give you additional benefits such as increased efficiency and better data quality.
Inline XBRL report acts like an integrated report which has both HTML rendering as well as XBRL tagging, eliminating the need to create, review and maintain separate documents and manage complex version controls. Early adoption will also help to identify any process issues and challenges associated with creating the iXBRL document.
With the use of IRIS CARBON®, you are a click away from preparing your iXBRL filing. Reach out to us if you want to be the first company to file to the SEC in iXBRL.