WHAT IS XBRL? – 2017 CHANGES TO SEC REQUIREMENTS

XBRL stands for eXtensible Business Reporting Language and is a technology for tagging data in order to identify and describe the information within an organization’s financial statements.  It is the standard for digital business reporting managed by a global not for profit consortium, XBRL International.  With XBRL reporting, data is machine-readable, can be searched, downloaded into spreadsheets, and reorganized for analysis rapidly, accurately, and digitally.  Regulators like the SEC require XBRL in order to look for statistical anomalies that may indicate abnormal accounting practices.  Often referred to as “bar codes for reporting,” XBRL makes financial reporting more accurate and efficient by allowing tags to be associated with reported facts.

Benefits Of XBRL

Clear Definitions – XBRL facilitates the creation of reusable, authoritative definitions, called taxonomies.  These taxonomies capture the meaning of all reporting terms used within a business report, as well as how those terms interact with each other.  These taxonomies make up the “language” of XBRL which is unlimited in its ability to grow and expand as needed.

Multi-lingual Support – Concept definition, or taxonomies, can be prepared in as many languages as necessary.  Translations of definitions can be added by third parties.  This means that organizations have the ability to display a broad range of reports in different definitions than the reports were prepared in.

Increase Company Transparency – The use of XBRL means that financial data and industry benchmarking are easily accessible in international capital markets.  Organizations can assess performance and conduct industry benchmarking analysis more easily.

Data Consolidation – XBRL provides a uniform standard for consolidating data from multiple disparate source systems. Manual processes are minimized by allowing automation of data validation and analysis, reducing time-consuming and costly collation and reentry of information.

Testable Business Rules – Business rules can constrain what can be reported.  These rules can be logical, mathematical, or both.

Who Uses XBRL?

The international XBRL consortium is supported by more than 600 member organizations, from both the private and public sectors. As per XBRL International, XBRL is used in many different ways, for many different purposes, including by:

Regulators

• Financial regulators who require significant amounts of performance and risk information about the institutions that they regulate.
• Securities regulators and stock exchanges that need to analyze the performance and compliance of listed companies and securities, and need to ensure that this information is available to markets to consume and analyze.
• Business registrars that need to receive and make publicly available a range of corporate data about private and public companies, including annual financial statements.
• Tax authorities that need financial statements and other compliance information from companies in order to process and review their corporate tax affairs.
• Statistical and monetary policy authorities that need financial performance information from many different organizations.

Companies

• Companies that need to provide information to one or more of the regulators mentioned above.
• Enterprises that need to accurately move information around within a complex group.
• Supply chains that need to exchange information to help manage risk and measure activity.

Governments

• Government agencies that are simplifying the process of businesses reporting to government and reducing red tape, by either harmonizing data definitions or consolidating reporting obligations (or both).
• Government agencies that are improving government reporting by standardizing the way that consolidated or transactional reports are prepared and used within government agencies and/or published into the public domain.

Data Providers

• Specialist data providers that use performance and risk information published into the market place and create comparisons, ratings and other value-added information products for other market participants.

Analysts and Investors

• Analysts that need to understand relative risk and performance.
• Investors that need to compare potential investments and understand the underlying performance of existing investments.

Accountants

• Accountants use XBRL in support of clients reporting requirements and are often involved in the preparation of XBRL reports.

What Are XBRL Requirements?

As of March 2017, Foreign Private Issuers (FPIs) that prepare financial Statements under International Financial Reporting Standards (IFRSs) are subject to the SEC’s XBRL filing requirements.  The SEC will allow a company to submit its initial XBRL-tagged interactive data file with its first annual report on Form 20-F or Form 40-F for the fiscal year ending on or after December 15, 2017.

Per the SEC’s regulations, a registrant must submit an interactive data file with the following components:

• Annual reports and transition reports on Form 20-F or Form 40-F.
• Reports on Form 6-K, but only if the Form 6-K contains (1) interim financial statements that were included in accordance with the nine-month updating requirement in Item 8.A.5 of Form 20-F or (2) a revised version of financial statements that were previously filed with the SEC.
• Certain Securities Act registration statements. A company conducting an initial public offering (IPO) is not required to include an interactive data file in its IPO registration statement. For subsequent registered offerings, an interactive data file is only required (1) in a Securities Act registration statement that includes (rather than incorporates by reference) financial statements and contains a price or a price range and (2) whenever the financial statements are changed (rather than in each filing or amendment). In the context of a business combination, XBRL financial information will be required for the filer (the acquiring company) but not for the company being acquired.

A full list of SEC XBRL requirements and resources can be found at the United States Securities and Exchange Commission website.

Information To Be Tagged

A registrant’s interactive data file must include the following XBRL-tagged information:

• Financial statements (each amount on the face of the financial statements must be tagged).
• Notes to the financial statements:
• Each footnote must be individually tagged as a single block of text.
• A registrant also must tag:
  • Each significant accounting policy in the significant accounting policies footnote as a single block of text.
  • Each table in each footnote as a single block of text.
  • Individual amounts (e.g., monetary value, percentage, and number) in each footnote.
• Financial statement schedules:
• Each schedule must be individually tagged as a single block of text.
• Individual amounts within each schedule.

Management Reporter And XBRL

One of the many software solutions that supports XBRL reporting is Microsoft Management Reporter.  Management Reporter is a performance management tool available to users of Microsoft Dynamics ERP.  In Management Reporter you can tag financial statements as you design them so that the tags can easily be reused. This will not only ensure that all reporting requirements are kept, but it will also help you save time when creating instance documents.

ACC is proud to offer comprehensive Management Reporter training classes.  These classes cover the following XBRL reporting capabilities:

• Setting up Taxonomies, Entities, and Units for XBRL
• Designing or modifying building blocks to enable XBRL reporting
• Generating and analyzing the output of XBRL reports