4 Steps for an Easy Transition to iXBRL
Starting in 2011, the SEC began requiring public companies to submit their financial statements in a separate XBRL exhibit to their quarterly and annual reports (and other form types). Starting in 2019, the SEC has mandated that public companies begin transitioning to Inline XBRL (iXBRL) format. iXBRL is a format that allows a company to embed data tagging directly in the text of an HTML document rather than tagging a copy of the information in a separate XBRL exhibit. Thus, instead of filing two documents to satisfy the XBRL requirement (the HTML file and the XBRL exhibit), companies will file only one file, the HTML file with embedded XBRL.
Because the iXBRL format is both human-readable and machine-readable, the SEC expects that the use of iXBRL will improve the availability and usefulness of disclosures to investors, market participants, and data users.
For reporting companies, the transition to iXBRL should, over time, simplify their compliance process, because instead of having two documents to create, proof, and reconcile (the HTML document and the XBRL document), companies will only have one document. However, this will depend on how well their service provider and/or disclosure software provider adapts to the new format.
Here are four things you can do to help make for a smoother transition to iXBRL:
Familiarize yourself with the basics of the iXBRL mandate
The when and the what of the iXBRL mandate are a good place to start.
When will the iXBRL mandate affect your company?
When will the iXBRL mandate affect your company?The iXBRL mandate is being phased in over a three-year period, as follows:
- Large accelerated filers that prepare their financial statements in accordance with U.S. GAAP will be required to comply beginning with fiscal periods ending on or after June 15, 2019.
- Accelerated filers that use U.S. GAAP will be required to comply beginning with fiscal periods ending on or after June 15, 2020.
- All other filers will be required to comply beginning with fiscal periods ending on or after June 15, 2021.
Filers will be required to comply beginning with their first Form 10-Q filed for a fiscal period ending on or after the applicable compliance date.
Companies may voluntarily file earlier than required.
What needs to be filed in iXBRL?
The same documents (10Ks, 10Qs) that were being filed in XBRL will now need to be filed in iXBRL.
Is there a separate taxonomy for iXBRL?
No, the taxonomy to be used is the same US-GAAP taxonomy.
Is there a change in the scope of what needs to be tagged?
No. The scope of tagging remains the same as what was needed to be XBRL tagged. All disclosures in the Financial Statements and Notes need to be tagged. There are however some technical differences in the approach to tagging, since iXBRL follows the iXBRL 1.1 technical specification. We’ll explain a little bit of the differences here, and get into more details on the technical differences in a separate blog.
Acquaint yourself with the key technical differences between XBRL and iXBRL tagging
There are a few simple, but key, differences in the way a document needs to be tagged in order to meet the specifications of the iXBRL mandate.
One example is what is called ‘tagging of duplicate values’. While tagging a document to generate an XBRL output, any disclosure that appears more than once in a document needs to be tagged only once. In the case of iXBRL, the same disclosure needs to be tagged in all occurrences in the document. So the value of cash, which appears in the balance sheet and in the cash flow statement, needs to be tagged in both places for an iXBRL output.
There are a few such technical differences between the XBRL and iXBRL specification, which we will cover in a subsequent blog. Getting acquainted with these differences will be useful while planning the move to iXBRL.
Check out what iXBRL outputs look like, using the SEC's Inline XBRL Viewer
The SEC has released an inline XBRL Viewer to make it easy to read and navigate through iXBRL documents that are published on the SEC website. The Viewer comes with some powerful functionalities – a search that allows users to locate specific disclosures quickly, filters that allow users to view information for select periods, and more. Here’s a peek at the SEC Inline Viewer for one of our client’s published iXBRL filings:
Feel free to explore this interactive document in more detail at https://www.sec.gov/ix?doc=/Archives/edgar/data/768411/000089710119000720/cybe-20190630.htm, or to view any other public iXBRL document on the SEC website, using the SEC Viewer.
Make sure that your service provider and/or disclosure software solution are ready for the transition to iXBRL.
If working with a third-party company:
- Find out what changes iXBRL will cause in the filing process you have grown used to;
- Ask to see examples of iXBRL they have created and filed for other companies;
- Ask whether the tagging environment for HTML and XBRL will be the same; that is, ask if they are using a single source system, where the HTML document and the tagging document are not separate.
If using an in-house disclosure software solution:
- Make sure that the software supports iXBRL;
- Get up to speed on the changes;
- Ask to see examples of iXBRL created and filed using their platform;
- Again, make sure that they are using a single source system.
The iXBRL requirement is going to raises the bar for XBRL reporting. Companies will have to devote more effort to the quality of XBRL data, since it becomes more visible on the face of the financial report itself, so now is the time to ensure that the provider and/or disclosure software solution you are working with is ready for iXBRL and as devoted to high quality data as you are.
One way to gain more control over your data quality is by using a cloud-based disclosure platform like IRIS CARBON®, which allows you to keep iXBRL in house, while tapping into expert support whenever you need.
