by Anuradha | April 10, 2017
The march of XBRL continues. On March 1, 2017 the U.S. SEC accepted the IFRS taxonomy for XBRL filing and published it on the SEC website as an approved taxonomy. This means that all U.S. foreign filers who are currently following IFRS and are filing their 20-F/ 40-F with the SEC in Edgar format will now also need to file in XBRL.
There are several foreign issuers listed with U.S. stock exchanges, that are required to file with the U.S. SEC. While some of these companies follow US-GAAP, others follow the IFRS accounting standard. In 2009, the SEC mandated XBRL filing for companies following US-GAAP because that was the only taxonomy published back then.
At the same time, the Commission required foreign private issuers that prepared their financial statements in accordance with IFRS to begin their submissions in year three of a phase-in period (2011).
The Commission believed at that time that, by the phase-in date, the EDGAR system would be able to support an IFRS taxonomy and an IFRS taxonomy would be sufficiently advanced to require its use. However, that didnt happen.
In absence of an SEC-approved IFRS taxonomy, companies following IFRS as an accounting method were exempted by the SEC to file their reports in XBRL.
But this has now changed.
On March 1 2017, the SEC approved IFRS taxonomy and directed foreign issuers who follow the IFRS standard to submit their financial statements in XBRL for fiscal periods ending on or after December 15, 2017.
Read the detailed announcement here: SEC announcement of IFRS mandate for foreign filers.
A company incorporated in India usually follows In-GAAP, however there are several Indian companies that are also listed in the U.S. and follow IFRS to file their 20-F reports with the SEC. These companies will now need to file their financial statements and notes in XBRL with the SEC, for financial year ending on or after December 15, 2017
With the IFRS taxonomy being accepted by the SEC, Indian companies that also file in the U.S need to plan their XBRL strategy for the year. While they might already be filing to the Ministry of Corporate Affairs (MCA) in XBRL, filing with the SEC will be a completely different ball game due to the detailed footnote tagging under the SEC XBRL mandate.
For CFOs, this means upgrading technology, training the team, planning operational details and ensuring that a serious matter such as compliance gets the attention it deserves.
Two keys ways of achieving this would be to start planning early and to proactively anticipate any further changes that might be coming down the line.
Let me illustrate both points above with a single example ? When the SEC introduced voluntary XBRL filing in 2005, companies that transitioned well in advance did not face any issues when XBRL was mandated in 2009. Similarly, in June 2016, the SEC started accepting voluntary filings in Inline XBRL or iXBRL (XBRL embedded within HTML) , which might well mean that an Inline XBRL mandate might be imminent in the near future.
We therefore recommend that foreign issuers upgrade their compliance programs well in time not only for XBRL filing, but also for Inline XBRL filing. IRIS CARBON®, our disclosure management platform is an iXBRL-compliant, cloud-based collaborative platform which ensures easy XBRL transition for companies like yours.
IRIS CARBON® has been developed by IRIS, a company that has been in the compliance space for over 2 decades, combining domain expertise with a strong technology backbone. We support over 700 Indian corporates to meet their MCA filing requirements and have handled SEC filings for ~600 filers over a seven-year period through our partner relationships (including some of the largest accelerated filers). You can reach out to us here to schedule a call with our experts to know how you can be best prepared for the transition. For any other queries, please write to me at email@example.com