Whats the Edgar Filer Manual 18.3 Upgrade All About?

The SEC’s filing platform- EDGAR System collects, validates and forwards submissions by companies to the SEC. In this regard, the SEC has released an EDGAR Filer Manual (EFM) containing instructions both for EDGAR HTML and XBRL reporting requirements on how to accurately prepare and submit filings with it. The SEC often revises these rules and updates EDGAR and the EFM to reflect the new electronic filing requirements that filers then have to comply to.

On October 1st 2018, the SEC upgraded the EDGAR Filer Manual (EFM) by bringing out a new release- EDGAR Release 18.3. A major part of this release has been focussed on improving the quality of XBRL that the SEC has been receiving. Below are the 3 XBRL updates filers need to be aware of while filing with the SEC:-

1. Use of Deprecated Tags in a submission (EFM 6.5.42) –

The SEC introduces a new version of the US GAAP taxonomy every year. This is with the attempt to introduce standardized concepts in the taxonomy and also to eliminate redundant XBRL tags (known as deprecated tags). The deprecated tags also have replacement elements in the newer version of the taxonomy. This rule suggests that deprecated tags are not to be used for submission with the SEC. We suggest the filers to replace the deprecated element with the suggested replacement elements provided in the taxonomy.

For example, the element ‘us-gaap_RoyaltyRevenue’ is deprecated in the 2018 US-GAAP taxonomy; hence filers are suggested not to use this element while preparing their Company taxonomy. If this element was used for previous filings, it should be replaced with the suggested replacement provided i.e., using ‘us-gaap_ProductOrServiceAxis’ with member ‘us-gaap_RoyaltyMember’ and element‘RevenueFromContractWithCustomerIncludingAssessedTax’.

2. When certain US-GAAP and IFRS numeric values are tagged incorrectly as negative (EFM 6.5.43) –

As per this EFM rule, certain elements such as ‘us-gaap_OtherExpenses’ cannot be tagged as negative. If it is negative, it would suggest that the filer may want to report this disclosure as an ‘income’ instead of an ‘expense’ and therefore, the element ‘us-gaap_OtherIncome’ will be more appropriate.

The SEC will mandatorily check if the below three US-GAAP and five IFRS elements appear in the submissions with negative value. If it does, Companies are required to use a more appropriate element.

US-GAAP Elements	IFRS Elements
OtherExpenses	OtherExpenseByFunction
AccumulatedDepreciationDepletionAndAmortizationPropertyPlantAndEquipment	OtherExpenseByNature
DeferredTaxAssetsLiabilitiesNet	DepreciationPropertyPlantAndEquipment
	DeferredTaxAssets
	DeferredTaxLiabilities

However, there is an exception to the above rule. The above elements can be tagged as a negative value, with certain axis and member combinations.

For example, a value can be tagged as negative with the element ‘us-gaap_OtherExpenses’ with the member ‘us-gaap_ConsolidationEliminationsMember’.

3. Use of custom Axis tags for purposes already served by certain existing Standard Taxonomy Axes (EFM 6.5.44) –

Companies filing with the SEC have the choice of creating a custom tag if all the standard elements are not available/present in the Taxonomy. However, as per this rule, filers are required to use the Shared Reporting Taxonomy (SRT) or US gaap taxonomy Axis Elements first instead of extending the custom elements unnecessarily. Below is the list of nine Axes from the SRT Taxonomy which encompasses this rule:-

Standard Taxonomy Axis Elements

CurrencyAxis

ConsolidatedEntitiesAxis

MajorCustomersAxis

ConsolidationItemsAxis

OwnershipAxis

RestatementAxis

StatementGeographicalAxis

ProductsOrServicesAxis

CounterpartyNameAxis

For example, instead of creating or using a new custom element such as ‘AllCurrenciesTypeAxis’ or ‘CurrencyNameAxis’ filers should use the ‘SRT: CurrencyAxis’ axis instead.

Companies which don’t comply with these new upgrades will be flagged with an EDGAR warning; which means the SEC won’t suspend filings which contain these errors. For a detailed analysis, please refer the specific rules defined in the Edgar Filer Manual 4.8.

With the introduction of the above the EFM rules, the SEC is moving towards improving the quality of filings that it is receiving every quarter. In the future we can expect the SEC to introduce more EFM rules in line with the XBRL US Data Quality Committee (DQC) rules.

We encourage all Companies to be in line with the new updates introduced both by the SEC and the XBRL US Data Quality Committee.