In 2018, The US Securities and Exchange Commission (SEC) adopted rules to have US companies submit their financial information in the Inline eXtensible Business Reporting Language format (iXBRL). The aim was to improve the quality and accessibility of data.
Information provided by the US filers can be:
- Financial statement information
- Fund risk/return summary information
iXBRL is a structured data language allowing filers to prepare one single document that is both:
- Human-readable (easily viewed directly in a web browser) and
- Machine-readable (XBRL tagged data, read with XBRL software)
The SEC iXBRL mandate has helped modernize the reporting process. It comes with numerous benefits:
- iXBRL reports are highly interactive. They provide users with information such as citations, relevant accounting concepts, definitions, and reporting period information. When accessed through XBRL software, they make analysis and peer-to-peer comparison easy.
- iXBRL reports are highly accessible and transparent because they are in the human- and machine-readable format.
- iXBRL reports are of high quality and in the long run, they reduce the time, effort, and cost involved in the reporting process.
Taxonomies Used For SEC iXBRL Reporting:
Taxonomies are classified into two types:
1. Standard base taxonomies and
2. Company extension taxonomies.
Filers supplement base taxonomies with company extension taxonomies to tailor base taxonomy to their reporting needs
The SEC urges companies to use the most recent version of the applicable taxonomy in their XBRL submissions to take advantage of the updated tags associated with new accounting standards and other developments. Here’s the list of taxonomies accepted by the SEC.
- Generally Accepted:
- US-GAAP 2021
- US-GAAP 2020
- SRT 2020
- Foreign filers:
- IFRS 2021
- IFRS 2020
- Mutual Funds:
- RR 2021
- RR 2018
- CEF 2021Q4
Apart from these taxonomies, no external taxonomies may be used for submissions to the SEC.
Complying With The EDGAR Filing Manual
Now that we are ready with the SEC iXBRL reporting information and have picked the appropriate taxonomy, it’s time to understand XBRL tagging.
XBRL tagging involves mapping the disclosures in a report to the corresponding taxonomy concept so that the report becomes machine-readable. An iXBRL document is one that is human-readable and machine-readable at the same time.
All XBRL documents must comply with the rules described under the EDGAR Filing Manual (Volume II- Version 60). Whether you handle XBRL tagging in-house or outsource it to a solution provider, ensure that they adhere to these requirements.
Mirroring The XBRL Tagging Outline
The XBRL tagging outline corresponds to a quarterly or annual report statement, note, or schedule. The subsections within different sections vary based on the levels of tagging. In the Notes to the Financial Statements, there are four levels of tagging:
Level 1: Text Block
Level 2: Policy text block
Level 3: Table text block
Level 4: Detail tagging
When arranging XBRL concepts, make sure that the structure mirrors the document’s presentation. Failing to replicate the outline, leads to validation issues
Creating Extensions and Company Taxonomy
When the standard taxonomy concepts don’t apply to your company’s report. To appropriately tag the value, you need to develop an extension concept. These are the same as standard concepts, tailored per need basis, resulting in the formation of company extension taxonomy.
Often companies end up creating unnecessary extensions even where not needed. Therefore, wise to use extensions with care and attention.
Read more about extensions here.
XBRL Tagging Of Auditor Information When Filing With SEC iXBRL
From December 15, 2021, the SEC amended the interim rules on “Holding Foreign Companies Accountable Act Disclosure”. This final regulation requires auditor information to be tagged within 10-K, 20-F, and 40-F annual reports. Here are the new iXBRL tagging requirements.
The new Document and Entity Information (DEI) 2021 Q4 taxonomy includes information about the following:
- Auditor Name
- Auditor Location
- Auditor Firm ID
Do Not Push XBRL Tagging For The End
You shouldn’t wait till the end of the SEC iXBRL reporting process to start using XBRL tagging. Choosing the right tag isn’t the only challenge. You must consider XBRL-specific concerns like data quality and authenticity.
We recommend reviewing the tags. Looking out for the presentation link base, units and scale used. It is advisable to tag and simultaneously review in small batches. This helps in reducing the pressure that builds up at the time of submission and saves from unnecessary amendments.
Validation Check For Your SEC iXBRL Filings
The last hurdle your SEC iXBRL filing goes through is a validation check. This makes sure that your report meets the technical requirements accepted by the SEC and the latest EDGAR Manual. Validation also confirms the accounting-based concept accuracy.
IRIS CARBON® comes with an in-built validator called IRIS Bushchat, which can help you spot issues with your SEC filings.
Why Do You Need To File Your Annual Reports With SEC
The SEC monitors information published by US companies and uses it to enhance compliance. Investors can use this information to assess a company’s financial health and perform due diligence.
It is crucial to remember that this step towards the modernization of business information reporting will be further refined in the coming days. Even though the entire SEC iXBRL filing process may seem to have many steps to it, with IRIS CARBON® you can keep your XBRL tagging issues at bay. IRIS CARBON® is a software solution that stays up-to-date with the ever-evolving regulatory mandates.