Highlights From the Recent FASB and XBRL Canada Webinars
WebFilings had the opportunity to host a webinar featuring guest presenters from the FASB about the state of external reporting. Shortly after, the XBRL Canada hosted a webinar on reporting developments at the SEC. Both presentations provided some great insight into issues being identified in current XBRL filings, the emerging uses of XBRL data, and updates to come.
Some of the changes in the recent release of Version 23 of the EDGAR Filer Manual (EFM) and the release of the 2013 US GAAP Financial Reporting Taxonomy (UGT) in May were discussed. These changes were further detailed in the recent blog post “How Does the EDGAR System Update Affect You?” which you can read here.
Now that the limited liability period for most companies is ending, the SEC is focusing on the data quality of the XBRL submissions. To date, there have been approximately 81,000 filings submitted with interactive data containing 50.9 million facts. The SEC and third parties (e.g., data aggregators and academics) are analyzing the the quality of the XBRL submissions for any areas of concern.
Initial key focus areas being reviewed are filings missing calculation assertions on their face financial statements or filings where the percentage of line item concepts are excessive. The SEC also reported on its use of the Accounting Quality Model (dubbed RoboCop by the press) to perform risk analytics on XBRL data submissions and look for companies which might be managing earnings.
Future Taxonomy Releases
With the recent 2013 UGT release, there has been some discussion about what we can expect out of future annual taxonomy releases. There is an increased emphasis on the stability of the taxonomy and having Accounting Standards Updates (ASUs) drive any future taxonomy changes. In the past, there may have been more changes to the taxonomy. Now, the FASB is assessing the cost-benefit of those changes much more carefully and erring on the side of not making the change if the taxonomy is serviceable in its current state (i.e., correcting a misspelled word in the definition).
New Commenting Process
The FASB announced a new commenting process for ASUs. In addition to the ASU Exposure Draft, an ASU Taxonomy Exposure Draft will be released concurrently with proposed changes to the taxonomy related to the ASU. A public comment period will follow allowing comments to be made on any of the proposed changes. This new process is being made to encourage review and feedback of proposed taxonomy updates early in the process. It is much less disruptive to make changes to a draft version of the taxonomy than a final version once companies are implementing the changes.
In addition, concurrent with the release of the ASU Exposure Draft, the FASB plans to release a draft exposure XBRL Implementation Guide followed by a public comment period generally lasting 60 days. The XBRL Implementation Guides provide guidance on using the taxonomy and include:
- Sample disclosures
- UGT elements used
- Illustrations of the structure underlying the instance document
- Notes that further provide support for mapping and modeling the required disclosure or ASU being discussed
To date, the FASB has released draft exposure implementation guides on several topical areas such as:
- Subsequent events
- Other comprehensive income
- Concentration of credit risk and reinsurance related to the insurance industry
XBRL Implementation Guides currently in process are:
- Stockholders' equity
- Balance sheet offsetting
- Notional amount disclosures
- Various ASU related topics for both exposure ASUs and final ASUs
Over the last couple of years, the FASB has had good success with industry group input and will be focusing on establishing the same effort in the banking and financial services sector. The goal is to help improve the consistency of filings within this industry group.
The SEC is currently considering whether to allow companies to file their EDGAR submissions using Inline XBRL. This format allows XBRL metadata to be embedded within HTML documents, so that data and associated rendering information can be combined within a single document. This allows the data to be viewed in a web browser versus requiring a custom viewer.
International Financial Reporting Standards
There continues to be a lot of interest in IFRS. The SEC staff is currently reviewing IFRS taxonomy for Foreign Private Issuers to determine whether or not to recommend it to the Commission for approval. However, the staff has not said when it expects to complete its review.
The external reporting landscape is constantly changing and evolving. There is a need to improve the quality of XBRL data submissions and increase the consumption of XBRL data. Based on recent statements from the SEC, we expect this to be a focus in the coming months.
About the Author
Mike Starr is Vice President of Governmental and Regulatory Affairs. He previously served as the SEC Chief Accountant’s advisor with a focus on investors’ financial information needs and the role of structured data in meeting those needs. Prior to his work with the SEC, Mike served as Chief Operating Officer for Grant Thornton International Ltd., where he oversaw global strategy and public policy. He earned a Bachelor of Science in accounting from Oklahoma State University (OSU), and in 2010 was recognized as an OSU distinguished accounting alumnus and inducted into the School of Accounting Hall of Fame.