SEC Approves iXBRL: What Are the Next Steps for Filers?
At an open meeting on June 28, 2018, the SEC announced a new mandate that many saw coming: SEC filers will soon be required to use the Inline eXtensible Business Reporting Language (iXBRL) format.
Inline XBRL has been voluntary in the United States since 2016. The SEC now believes that there are enough proven benefits and readily available technologies to make iXBRL submissions the new filing standard. Here is a breakdown of what we know so far:
- What filings will require iXBRL?
Required iXBRL submissions will include operating company financial statements and fund risk/return summary information and related changes.
- Which companies are affected by the iXBRL mandate?
The iXBRL mandate will affect operating companies and funds. As a result, these organizations will be able to submit a single human- and machine-readable filing, eliminating the need to post XBRL data on their websites.
- When is the iXBRL effective date?
iXBRL adoption will take place in phases for periods ending on or after June 15, 2019, through June 15, 2021, depending on your filing status.
SEC Chairman Jay Clayton said transitioning to iXBRL represents a modernization of reporting and a move to improve the accessibility and usefulness of information to investors. “The commission will continue to monitor industry practices and market developments in disclosure technologies and ensure our rules adapt with the times,” shared Clayton in a statement.
Inline XBRL is already used by several regulators around the world, including the United Kingdom's HMRC, Ireland's ROS, and the EU's ESMA with its upcoming ESEF Reporting requirement. As of this writing, tax authorities have received over 4 million filings from companies using iXBRL.
Workiva applauds the SEC on its decision to move forward with iXBRL, which will improve the quality and accessibility of data and continue the modernization of disclosures.
What is iXBRL?
iXBRL allows you to incorporate your XBRL tags into your HTML-formatted financial statements, rather than filing a separate XBRL instance document. The iXBRL specification provides a mechanism for embedding XBRL tags in XHTML documents. The XBRL benefits of tagged data—such as consistency and accuracy—can be combined with a reader-friendly presentation of a report, which is under the control of the preparer.
Today, filers submit their financial information to the SEC in two separate formats: HTML and XBRL. Maintaining these two formats with identical financial information is not only time-consuming, but will result in errors if the information across documents is not kept in perfect alignment. Using iXBRL maintains the same human-readable HTML format of the financial statements when viewed in a web browser while integrating the XBRL tagging to those statements.
In addition, the adoption of iXBRL is significant because it highlights the SEC's commitment to structured data by making XBRL easier to consume and reducing regulatory burdens on registrants.
In an interview with Compliance Week, Campbell Pryde, president and CEO of XBRL US, praised the new regulation for its potential to improve data quality. “It tightens up the relationship between the document and the underlying XBRL data, and that’s a good thing,” said Pryde.
What does iXBRL mean for SEC filers?
Inline XBRL will not change the document preparation process, but accounting teams may appreciate being able to render tagged financial information in a familiar, controlled format.
The move toward iXBRL should bring positive benefits to the filing process. Here is the breakdown on the impact of iXBRL:
- iXBRL should not require any additional work from you
- iXBRL eliminates a duplicative filing requirement by combining two documents you already file—the HTML version of your filing and your XBRL instance document
- iXBRL saves time and effort by not having to retag data for prior periods
The convergence of the HTML filing document and the XBRL instance document will reduce the work involved and potential for tagging errors. These benefits can be realized thanks to modern SEC reporting technology such as Wdesk that already supports iXBRL.
“Our Wdesk customers have the ability to file using Inline XBRL today,” said Marty Vanderploeg, CEO of Workiva. “We are encouraging early adoption of Inline XBRL to enhance the usability of XBRL data.”
How can filers best prepare for iXBRL?
We encourage filers to start the education process early. Here are a few things you can be doing now, before iXBRL goes into effect:
- Research how your company will be affected—examine the different rules and timelines for your type of filing
- Establish a relationship with a trusted partner
- Attend webinars and other events that can help answer questions around XBRL, iXBRL, and filing best practices
- File using iXBRL ahead of the effective date
Don't wait until 2019 to begin your iXBRL implementation. Begin following best practices for iXBRL compliance today and rest assured that your submissions will meet SEC guidelines when the mandate takes effect.
The filing community should look at the iXBRL requirement as a positive move by the SEC. It both reaffirms the SEC's commitment to digital process and structured data, and the pursuit to continue to optimize the XBRL filing process for businesses.
Workiva customers always have complete assurance that their HTML filings and XBRL filings are in sync because of live-linking and instant EDGARization in Wdesk. In addition, filers using Wdesk already have the advantage of working in a single document.
Wdesk was used to create the first Inline XBRL filing less than three weeks after the SEC introduced the voluntary format in the United States in June 2016. Nine months later, in March 2017, the SEC proposed amendments to require Inline XBRL in filings submitted by public companies and mutual funds that currently file with XBRL. The most recent announcement by the SEC makes iXBRL official, beginning in 2019.
For more information on how Workiva can support you during the transition to the inline format, visit our XBRL and iXBRL resource page.