iXBRL for Funds and Variable Contracts: What to Know
The deadlines for financial services providers to start filing certain disclosures in Inline XBRLTM format are quickly approaching—with a twist.
If the first half of 2020 has taught us anything, it's to be prepared. The U.S. Securities and Exchange Commission (SEC) adopted iXBRLTM requirements for mutual funds, closed end funds, and variable annuity and variable life insurance products, which were long expected. But, that doesn't make meeting the mandate any less overwhelming—especially for those adding XBRL® tags for the first time. Throw in the added curveball of remote teams, and this process can get difficult...fast.
Financial services providers have already started using the Workiva platform to prepare iXBRL submissions to the SEC.
Let's take a quick look at the requirements and dive into strategies for meeting them, no matter what challenges lie ahead in the coming year.
XBRL format vs. iXBRL format
Both formats are intended to make data easier to analyze and use. You can add machine-readable XBRL tags to pieces of financial data to classify information according to a standard taxonomy. The iXBRL format allows you to embed those machine-readable XBRL tags into an HTML document, so humans can read it, too.
(Investment and insurance providers are not currently required to provide an iXBRL viewer on their websites, but if you're interested in that kind of thing, Workiva has developed an iXBRL viewer that's available as open source software.)
Mutual funds, closed end funds, and variable annuity and variable life insurance products face different requirements for iXBRL filing, as you can see from this timeline.
Before we dive in to a little more detail, here is a quick view of iXBRL compliance dates for mutual funds, business development companies and closed end funds, and variable annuity and variable life insurance contracts.
iXBRL deadlines and demands for fund groups
The SEC is requiring large fund groups with $1 billion or more in assets to file fund risk/return summary information in iXBRL format for initial registration statements (or an annual update to a registration statement) effective on or after Sept. 17, 2020.
The deadline is Sept. 17, 2021, for fund groups that fall short of that asset threshold.
What to know for closed end funds
A separate rule requires business development companies (BDCs) and closed end funds to provide management’s discussion of fund performance (MDFP) in annual shareholder reports starting Aug. 1, 2021. As part of that rule, they also must comply with iXBRL reporting requirements for financial statement data, registration statement information, and prospectus information for affected funds that are eligible to file a short-form registration statement, starting Aug. 1, 2022.
What to know for variable contract products
The SEC recently announced its rule to streamline variable annuity and variable life insurance disclosures for new investors. The goal is to make it easier for investors to evaluate which product is best for them.
The rule requires providers to tag disclosures in registration statements or amendments on Forms N-3, N-4, and N-6 forms of prospectuses that include information that varies from your registration statement. (Check out the "filings to be tagged" in the 713-page rule for more details.) Essentially, you'll be tagging information to help investors more easily compare key benefits or features, fees or costs, principal risks of investing, standard death benefits, other available benefits, investment options, taxes, and conflicts of interest.
The compliance deadline is Jan. 1, 2023.
Plan now to meet the deadlines
Companies have been using Workiva to meet XBRL and iXBRL requirements for years, including the first iXBRL filer to the SEC. We've found a few strategies to be helpful for meeting deadlines with as little stress as possible.
Based on what I've seen, here's what I would recommend:
- As you work through vendor decisions, look for end-to-end content management and reporting solutions, so you don't have to work with multiple vendors. It's nice to have everything in one place, so you can aggregate data, create reports, collect sign-offs and approvals, add XBRL tags, and file in a single platform or application.
- Start early on plans for meeting the mandate, so you're not scrambling before the deadline. Having a buffer should also reduce stress, especially if we run into more unexpected disruptions like natural disasters or another wave of COVID-19 infections.
- Speaking of disruptions, there's no telling how long it will be before we're all back in the office. If the COVID-19 pandemic exposed gaps in business continuity, make a plan now to ensure you can still meet filing deadlines if critical employees are forced to work remotely.
Workiva has been there before, helping teams work from anywhere, at any time. Our own Professional Services team can also work wherever, whenever with our platform.
Let us know if you'd like to talk more about meeting the iXBRL requirements.
How ready are you for iXBRL reporting? Take this informal quiz.
Inline XBRL™, iXBRL™, and XBRL® are trademarks of XBRL International, Inc. All rights reserved. The XBRL™/® standards are open and freely licensed by way of the XBRL International License Agreement.