Each year, the Financial Accounting Foundation (FAF) and the Financial Accounting Standards Board (FASB) collaborate on the development and maintenance of the GAAP Financial Reporting Taxonomy (GRT). Recently, they issued the ‘Proposed Technical and Other Conforming Improvements’ for public review and feedback. These proposed changes for the 2024 GAAP Financial Reporting Taxonomy are crucial updates alongside Accounting Standards Updates (ASUs) and common reporting practices. However, the final approval from the U.S. Securities and Exchange Commission (SEC) is pending, expected early this year.
Summary of Key Changes
Here’s a concise overview of the major topics and ASUs impacted by the proposed 2024 GRT Taxonomy
- Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (ASU 2023-07)
- Intangibles – Goodwill and Other: Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets (ASU 2023-08)
- Income Taxes (Topic 740): Improvements to Income Tax Disclosures (ASU 2023-09)
- SEC Release Nos. 33-11070; 34-95025 (includes annual reports for employee benefit plans for Form 11-K)
- Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance
- Other improvements, including from the Reference Project
Count of Taxonomy Changes and Updates
|New Elements Added
|Documentation and Standard Label Changes
Extensible Enumeration Items
Extensible Enumeration elements don’t show either in the Presentation or Calculation hierarchy and only appear as domain-member relationships under the definition linkbase. The 2024 GRT taxonomy has introduced 113 new elements related to ‘Extensible Enumeration’ mainly to cover the topics of Crypto Currency, Income Taxes, Segments, Investment-Tax Credit or Technical Improvement.
Employee Benefit Plans (Sec Form 11-K)
In the proposed 2024 taxonomy, there is an introduction of a separate entry point for ‘Employee Benefit Plans (EBP)’ for tagging the information filed with SEC as Form 11-K. The introduction of this new entry point in the GRT taxonomy will be represented as a code starting from ‘9611’ and will be identified as the prefix ‘us-gaap-bp’. A total of 367 new elements have been added especially for EBP with specified relationships, labels and references structured for tagging. These new set of elements cover statements, disclosures and schedules included in the financial statements of employee stock purchases, savings and similar plans in the filing of SEC form 11-K.
Meta Model Relationships
The meta model relationship introduces nine base-level accounting model relationships and is published in a directory titled ‘meta/,’ in like to the DQC Rules Taxonomy (DQCRT). Similar to the DQCRT, the meta-model is crafted to offer supplementary information about elements in the GRT without altering the current structure. The idea is to aid preparers in identifying the appropriate elements for tagging their filings, facilitate data users in consuming data by providing additional relationship information and help in creating business rules that utilize this information to ensure proper elements selection.
The base-level accounting model relationships are provided below
DQC Rules Taxonomy
The XBRL US DQC Rules Taxonomy (DQCRT) has been published with the UGT 2024. The DQCRs are XBRL US-published validation rules for XBRL filings with the SEC. This taxonomy includes the DQCRs in a derivative form that identifies the concepts that the rules apply to, with the necessary information for software and human readers to understand each rule and the elements to which it applies.
Keep in mind that the DQCRT does not include application logic that would support the rule being run directly from the DQCRT. Users will need to apply their application layer or use the rule application as provided by XBRL US.
There have been 24 additional DQCRs included for 2024 for a total of 46 DQCRs currently in the DQCRT. Additionally, DQC Rule 0015 which was added with the 2020 DQCRT has made modifications to make it the 2024 DQCRT. Over time, it is expected to include more DQCRs.
Calculations 1.1. is a new standard recommended by XBRL International, Inc. (XII) that ideally solves a couple of issues with calculation assertions mainly related to rounding-off and duplicate facts. Generally, the numbers reported in the Financial Statements are more precisely reported as compared to the numbers reported in Notes to Financial Statements. There could be multiple occurrences of a fact value being reported in a financial report in different sections of a report. To facilitate the Inline XBRL best practice, every such occurrence of the fact-value has to be tagged to ensure and maintain consistency which allows users to navigate between the facts. For instance, the revenues reported in Statement of Operations/Income/Profit and Loss may be reported as $5,625,000; whereas, in the notes to financial statements, it would be rounded off to $5.6 million. Due to this inconsistency of numbers being reported, there are certain warning messages to the filers. However, getting this new rule will solve the problem and will not raise or show any such warnings.
These recommendations have already been under SEC review and the new proposed taxonomy is expected to be approved by the SEC early next year.
The proposed 2024 U.S. GAAP Financial Reporting Taxonomy Implementation Guides encompass significant updates and improvements, aiming to enhance financial reporting quality and consistency. As these recommendations undergo SEC review, they are poised to bring clarity and efficiency to financial reporting processes in the upcoming year.