2014 Taxonomy: The Final Draft Is Released
The final draft of the 2014 taxonomy has been released by the FASB, and sent to the SEC for their review and approval. You can find the taxonomy and release notes with all of the 2014 changes here.
What happens next? The SEC will conduct a final review and testing of the taxonomy, and schedule it for release in an EDGAR update in early 2014.What are the big changes this year?
Actually, the biggest change is that there aren't many changes.
After several years of working to bring consistency to the taxonomy and making sure it has the right elements to cover most disclosures, changes this year focused on new accounting standards. A couple of infrastructure changes are addressed and a few best practices are also thrown into the mix.
There's a new calculation hierarchy in the taxonomy, which is significantly simpler and easier to follow than the previous version. While you aren't required to take the calculation hierarchy into account when you're selecting elements, it can provide you with important information about how the element is intended to be used.
One common error filers make is to use elements meant for unclassified balance sheets on a classified balance sheet. The new calculation hierarchy will make it easier to see if you make this error.
The location of country members is another new change in the 2014 taxonomy—country members are now included on the Geographical Axis. If you're reporting information for a country or other geographic area, you should use the member for that location from the taxonomy.
Also, be aware that there are standard members for states and provinces. These members are located in the SEC's State and Province schema, which you can import for use in your filings. There's no need to create extensions for countries, states, and provinces, or most geographic areas such as the European Union, Asia, Africa, and many others.
Best practice changes included adding clarification to the definitions for maturity schedules to distinguish between elements used for annual disclosures and elements used for interim period disclosures. Elements were added for accumulated unrealized gains and losses on securities and balance sheet offsetting, and a Tax Period axis was added for reporting tax disclosures by various tax periods.What does this mean for you?
When should you start using the new taxonomy?
Although you can't use the taxonomy until it's accepted by the SEC and listed on the taxonomy website, there are some things you can do now to get ready for the transition.
First, read the release notes, and make sure you know what changes are likely to affect your filings. Also, if you're considering creating an extension for something that is in the new taxonomy before you've made the transition, consider copying the element information from the new taxonomy for your extension.
The SEC strongly encourages you to use the most current version of the taxonomy for your filings. Make sure you have a plan in place for taxonomy transitions because the taxonomy will be updated every year for new accounting standards.
Don't wait until the last minute—keep in mind that the new taxonomy could be released before you file your next 10-K. Skipping a version is extremely risky, and not recommended. If you're still using the 2012 taxonomy, that version will be removed when the 2014 version is released and you could be faced with a last-minute transition when you're getting ready to file.What's on the horizon?
The development of the 2015 taxonomy has already started!
Simplification is the theme for the coming year in accounting standards, disclosures, and XBRL. Continuously improving the taxonomy requires input from taxonomy users, and you can add your comments at any time—there's no need to wait for the public comment period.
If you have ideas on how to simplify the taxonomy, if you see elements that appear to be duplicates, or if you find that it's difficult to select between similar elements, please share your findings by adding a comment to the taxonomy. Click here for the development taxonomy and more information about adding comments.