Back in June of 2018, the US SEC issued the final rule requiring registrants (operating companies and funds) to use the Inline eXtensible Business Reporting Language (iXBRL) format in their submissions. Intended to improve the accessibility and quality of XBRL data, the amendments were a long time in the making. Modernizing reporting and enhancing the usefulness of disclosures to investors has been at the core of the Commission’s efforts.

Backdrop

The US SEC embraced XBRL submissions back in 2009. With the introduction of the iXBRL mandate, HTML and XBRL-encoded information will combine to form one single report, replacing the older system of filing XBRL data separately. This will bring much needed cohesiveness to reporting in addition to making it more comprehensible. We provide some more reasons behind this switch in the next section.

Rationale behind the iXBRL mandate

While the XBRL standard’s versatility lends itself admirably to business reporting, there are ways in which iXBRL does it better. Here are a few key points:

FERC XBRL mandate

Issuers get full control over the appearance of XBRL disclosures within the HTML filing.

FERC XBRL mandate

It reduces the likelihood of discrepancies between the XBRL and HTML filings while improving the quality of XBRL data.

FERC XBRL mandate

It improves the usability of structured investor disclosures through greater transparency and availability of data, providing data users the capability of viewing the iXBRL layer within the same document.

After the Commission’s announcement with regards to iXBRL adoption, it became clear that the rollout would occur in three phases over the course of three years from the date of notification. The next section details these phase-ins along with relevant dates and categories of filers to whom they apply.

Phases of the US SEC iXBRL mandate

Under the US SEC iXBRL mandate, filers are required to comply starting with their first form 10-Q or Quarterly Report, for a fiscal period ending on or after the relevant compliance date. Figure 1 below highlights some of these dates and the associated categories of filers they apply to. Phase 1 (red dot) came into effect from June 15, 2019, for Large Accelerated Filers (LAFs). Phase 2 (yellow dot) began on June 15, 2020, for Accelerated Filers (AFs). Although definitions for what constitutes a LAF and AF have since undergone some revisions (with the addition of the revenue test), they are now defined as seen in Table 1 below.

As previously suggested, the US SEC iXBRL mandate covers both operating companies as well as funds. It lays down the following rules related to the US SEC iXBRL mandate transition for large fund groups as well as all other funds:

FERC XBRL mandate

Large fund groups (with net assets of $1B or more) are required to comply two years after the effective date of the amendments.

FERC XBRL mandate

All other fund groups (not matching the above criteria) are required to comply three years after the effective date of the amendments.

Figure 1 – Compliance Timeline

 iXBRL mandate

Table 1 – Filer Categories

Relationships between Smaller Reporting Companies and Non-Accelerated, Accelerated, and Large Accelerated Filers under the Amendments
Status Public Float Annual Revenues
Smaller Reporting Company and Non-Accelerated Filer Less than $75 million N/A
$75 million to less than $700 million Less than $100 million
Smaller Reporting Company and Accelerated Filer $75 million to less than $250 million $100 million or more
Accelerated Filer (not a Smaller Reporting Company) $250 million to less than $700 million $100 million or more
Large Accelerated Filer (not a Smaller Reporting Company) $700 million or more N/A

* Source – US SEC

While Phase 3 of the iXBRL mandate is set to begin in June this year, there are some key considerations that issuers need to take cognizance of with respect to the implementation of US SEC iXBRL requirements.

iXBRL mandate: What do you factor in for compliance?

In addition to assessing whether your chosen vendor can prepare an iXBRL report, issuers need to make sure their filing does not contain any validation errors. This is because the EDGAR system will invalidate the entire filing (not just the iXBRL bit) in case validation errors are found. Even though issuers may use third-party service providers, they hold the overall accountability for their filings. Therefore, there are two aspects of filings issuers should pay heed to:

FERC XBRL mandate

Understanding how the iXBRL mandate adoption will affect internal timelines and the nature of their filing preparation and review process is critical.

FERC XBRL mandate

Understanding how the iXBRL mandate adoption will affect internal timelines and the nature of their filing preparation and review process is critical.

A staggered rollout of new regulations helps in bringing the cost of reporting down as reporting solutions become more prevalent and inexpensive with time. With the third and last phase of US SEC iXBRL mandate compliance kicking in, it is worth taking a closer look at your existing software solution/vendor to check if they are compatible with iXBRL reporting. If you are managing your filing using a financial printer or filing agent, you may want to check with them for readiness with regards to US SEC iXBRL reporting.

IRIS is a pioneer in the XBRL reporting space with a global footprint in over 40 countries, and the name IRIS inspires trust amongst both regulators and filers. Our solutions have benefitted more than 1.5 mln filers across the globe since the year 2005. We have been working with filers in the US markets since the start of the US SEC XBRL mandate, and IRIS CARBON®, our cloud-based collaborative solution for issuers, consistently tops XBRL quality assessments put out by independent third-party reviewers.

For more information, or to schedule a consultation, send us an email at info@iriscarbon.com

iXBRL Mandate, iXBRL, SEC iXRBL, US SEC

iXBRL Mandate, iXBRL, SEC iXRBL, US SEC

iXBRL Mandate, iXBRL, SEC iXRBL, US SEC