One of the most important languages in business is surprisingly never spoken enough. The XBRL reporting standard is a machine-readable format used the world over by companies to file with regulators. XBRL has been in the global arena for a while now; it is leveraged by over 100 regulators in more than 60 countries. In the US, XBRL filing was mandated by the SEC in 2009 to increase transparency and accountability in reporting, which is now shifting to iXBRL filings.
XBRL is a purely machine-readable format. The technology around XBRL has evolved since into inline XBRL (or iXBRL as it is popularly called), now allowing filers to integrate XBRL data within their HTML filings, letting both humans and machines read off the same document.
In June 2016, the SEC announced that filers could now voluntarily file in iXBRL effective through March 2020. With this, the SEC has moved a step closer to its commitment to data quality. What is particularly laudable is the SEC’s intent to move to a standard that is also easy to use for filers, regulators, and analysts alike. In another statement by the SEC in June 2018, it plans to roll out iXBRL in a phase-wise manner starting 2019 through 2021.
Though voluntary up to March 2020, the early shift to iXBRL filings can be used as a gestation period for the transition. It can not only give you an edge but also provide you with additional benefits such as increased efficiency and better data quality.
iXBRL Filings – An encouraging global trend
The benefits of iXBRL are plenty. With iXBRL, filers need no longer to work on two separate formats- XBRL and HTML for their SEC filings. What’s more, because of inline XBRL’s inherent human-readability, analysts can take notice of and comprehend the data in their documents and use it for investor relations and analysis. Regulators also benefit from this move as data mapped from the back end and front end merge to be read as one standard in its entirety. This will also help identify early signs of fraud or malpractice.
For those who are still contemplating the move due to its perceived novelty, we have some news. Inline XBRL is not a new concept at all. It has already made inroads with several regulators around the world. Here is a list of regulators that have already adopted the standard and are gaining significant benefits from it.
- In April 2011, companies in the UK started filing their annual accounts and corporation tax returns in inline XBRL to Her Majesty’s Revenue and Customs (HMRC)
- Japan’s Financial Services Agency (JFSA) mandated XBRL in 2008 and this was later replaced with the iXBRL format in 2013.
- In 2012, the Revenue Commissioners of Ireland initiated a voluntary program for all taxpayers to file their financial statements in inline XBRL. The mandatory filing was introduced in phases till October 2014.
- The Danish Business Authority, Denmark introduced iXBRL in a phase-wise manner in 2015.
- In 2015, the Australian Securities and Investments Commission (ASIC) had begun the iXBRL filings program.
- The CIPC in South Africa mandated Inline XBRL with effect from July 2018.
Apart from this, the S.S.M in Malaysia also has passed a peremptory decree for qualifying companies to file in iXBRL and the ESMA in Europe has also mandated companies to file in the iXBRL format beginning in 2020.
When Does Inline XBRL Apply For Companies?
Inline XBRL applies to companies based on the filer type. Below is a quick grid that shows details from when Inline XBRL will be compulsory for companies.
|Type of Company
|Inline XBRL Effective Date
|Large accelerated filers
|Beginning with fiscal periods ending on or after June 15, 2019
|Beginning with fiscal periods ending on or after June 15, 2020
|Smaller Reporting Companies and Non-Accelerated Filers
|Beginning with fiscal periods ending on or after June 15, 2021
Why should you adopt iXBRL filings when it is still voluntary?
Companies have been given the option to voluntarily file inline XBRL until the dates provided in the above table. During this time, the SEC may ignore initial hiccups in iXBRL filings and you may use this period as an opportunity to prepare for the mandatory filing. This will also allow you to strengthen your internal processes and gain early benefits from the use of Inline XBRL. You shouldn’t wait for it to become mandatory to begin your iXBRL implementation. Early adoption of the mandate will also help to identify any process issues and challenges associated with creating the iXBRL document.