Dec. 15 was an important milestone for foreign private issuers (FPIs). On or after this date, FPIs filing in the IFRS Taxonomy with the U.S. Securities and Exchange Commission (SEC) need to file quarterly and annual financial statements in XBRL. This deadline for IFRS XBRL adoption was announced on March 1, when the SEC published the addition of the SEC 2016 IFRS Taxonomy to the EDGAR Filer Manual on its website. In preparation for the busy annual reporting season, filers from countries around the world are working to make sure they are on track with the new requirements.
To help benchmark your preparedness for this new SEC requirement, this blog post outlines seven steps required for a successful IFRS XBRL adoption process.
|Example of IFRS Adoption Timeline|
|March 2017||IFRS 2016 Taxonomy accepted by the SEC|
|April–June 2017||Evaluate and select tagging solution/service option|
|2H 2017||Initial tagging of shell document and XBRL training (especially for review)|
|October 2017||IFRS 2017 Taxonomy accepted by the SEC|
|December 2017||Fiscal year-end (Dec. 15, 2017, or after)|
|Shell document tagging preparation complete|
|January 2018||Shell document tagging validation and review complete|
|Initial test filing performed|
|1Q 2018||Maintain XBRL throughout document drafting cycle|
|Test file again one week before live filing|
|March–April 2018||40-F and 20-F filing deadlines|
7 steps for successful SEC IFRS XBRL adoption
- Identify team resources.
Establish the team that will be responsible for preparing and filing your XBRL. The number of people you need on the team will be determined by the size of the document and the complexity of your company disclosures. A good approach for first-time filers is to dedicate a power user who can lead the project and develop a plan to populate XBRL knowledge throughout the organization over time.
Plan your reporting calendar, including new XBRL milestones.
Being organized and on top of deadlines is extremely important as you approach this new mandate. XBRL is an additional responsibility that must be incorporated into your process, rather than tagging it on at the end. Establish XBRL milestones, integrate them throughout your filing calendar timeline, and schedule regular reviews to make sure deadlines are met. Download the 2018 SEC filing calendar to outline milestones for the coming year.
Research how you will be affected.
Gather all the information you can about the XBRL and the IFRS Taxonomy to make sure you understand the scope and complexity of first year XBRL implementation. Refer to these helpful resources as you get started:
Establish a relationship with a trusted partner.
The XBRL tagging and reporting burden is heavy—it adds time to your reporting cycle. Save time throughout your process to make up for these additional time constraints by leveraging a proven technology partner. It is imperative that your partner not only offers XBRL-tagging support but will also streamline the amount of time the rest of the reporting process requires.
Tag and review in batches.
Do not wait to get started—XBRL tagging is not a task to be left until the end of the cycle. First-time filers may incorrectly assume that element selection is the main task in preparing XBRL, but there are many other technical requirements to consider. Filers are encouraged to seek outside support. The process is more complicated than choosing the correct tag—there are technical issues specific to XBRL to ensure validity and data quality of your XBRL filing.
A few things to be aware of during reviews: maintaining the presentation linkbase, using the correct scale and unit, and maintaining the accurate use of positive and negative signs. Begin the tagging and review of the shell document as soon as possible and perform in batches. Complete this process by the beginning of the new document drafting cycle.
Establish a process for directed reviews.
Focus the content of your reviews on completeness, accuracy, and proper tagging based on underlying reporting requirements, rather than presentation style. Presentation order of the disclosure may not always match the presentation order of the taxonomy. Take a close review of the taxonomy before choosing to create an extension. Do not judge the quality of the tagging based on the rendering as the SEC viewer rendering engine has its own logic and is not meant to replicate the original document style.
Maintain XBRL accuracy.
It is essential to keep your XBRL tags up to date throughout the document drafting process. Avoid waiting until the last minute to update XBRL, especially for the initial implementation. For filers who are not using an integrated platform like Wdesk, it is important to note that modifying your document could result in XBRL changes, such as adding and deleting tags. Keeping changes in sync between the document and XBRL is often a manual process that warrants extra attention.
With the annual reporting season fast approaching for both U.S. filers and foreign private issuers, time is of the essence—you do not have time to question if your XBRL project will meet SEC standards. If you find gaps in your ability to execute on these new requirements during your process assessment, Workiva is available to assist—we offer a variety of XBRL consulting, training, and support services to ensure successful implementation of FPI support for XBRL. Find out how the Workiva Professional Services team can help you.