SEC’s Big Move: Why is it adopting inline XBRL by allowing voluntary filing in this format?
The Securities and Exchange Commission (SEC) announced on June 13, 2016, that it will allow companies to voluntarily file structured financial statement data in Inline XBRL (iXBRL).
This is another step in the SECs endeavor toward making transparent, clean data on company disclosures easily accessible to all. It is a welcome move and one that we have anticipated for some time. Read our earlier post where we wondered if iXBRL was the SECs next move in structured data reporting?
The SEC first introduced XBRL in 2009 for quarterly and annual filings of US public companies and mutual funds. And since XBRL was touted to be the machine-readable language, it was literally used for just that. Human beings on the other hand relied on the more user-friendly HTML in order to make sense of the filings.
The technology around XBRL has evolved since and one of the innovations, inline XBRL (or iXBRL as it is popularly called) now allows filers to integrate XBRL data within their HTML filings, letting both humans and machines read off the same document.
There is one other challenge that iXBRL helps mitigate. Currently, companies file quarterly and annual documents in both XBRL and HTML. But since users normally read the HTML version and not the XBRL one, filers tend to get complacent over the data quality of their XBRL filings. We have found many examples where there have been material differences between the HTML document and its iXBRL version. Read about one such example here.
iXBRL can solve this problem as it is nothing but XBRL with a presentation layer over it.
The SEC has been increasingly focusing on data quality. The formal advent of iXBRL within the organization heralds good times not only for the improvement in data quality but also for increasing the use of XBRL data by investors, companies, and other stakeholders. Right now, there is not much happening in terms of using XBRL data in areas such as investor relations, corporate benchmarking, and analysis. But iXBRL could change all that.
What Does this Announcement Mean for Filing Companies?
The SEC’s order clearly states that until March 2020, companies are only required to file voluntarily in iXBRL. This will give the market enough time to respond with tools for the preparation and analysis of data and also allow companies and other stakeholders to evaluate its usefulness.
For many companies, this will mean that running parallel processes for the preparation of HTML and XBRL files will no longer be required. What they will need instead is a product that provides a single source output. A product like ours.
IRIS CARBON®, our disclosure management platform is already iXBRL-compliant. We have been working with iXBRL since April 2011 when Her Majesty’s Revenue and Customs (HMRC) mandated iXBRL filings for all entities in the UK. And we’ve taken that experience to future-proof your SEC filing process too.
If you want to be the first company to file to the SEC in iXBRL and learn about the several ways in which you can use XBRL data, reach out to us.