The Securities and Exchange Commission (SEC) voted last week to propose amendments to require the use of Inline XBRL (iXBRL) for public companies and mutual fund filings. According to the SEC, the Inline XBRL proposal would have the potential to benefit investors and other market participants while decreasing, over time, the cost of preparing information for submission to the SEC. The recommendations are part of the SEC’s disclosure modernization initiative.
Also this week, the SEC published on its website the addition of the IFRS Taxonomy to the EDGAR Filer Manual. This newly published taxonomy will enable foreign private issuers that prepare their financial statements in accordance with the International Financial Reporting Standards (IFRS) to submit those reports using XBRL. Foreign private issuers may begin immediately to submit their financial statements in XBRL. The SEC also announced that all foreign private issuers must submit their financial statements in XBRL for fiscal periods ending on or after Dec. 15, 2017.
If approved, the proposed iXBRL amendment will replace the use of standard XBRL in digital filings and will require company financial statement information and mutual fund risk/return summaries to be filed in the inline format. The proposed amendment also states that the iXBRL requirements for operating company financial statements would be phased in over a three-year period, possibly starting in 2018. Requirements for mutual funds risk/return summaries would be phased in over a two-year period.
Workiva has been anticipating these announcements and has been preparing the Wdesk platform to support iXBRL. As of March 2, 2017, 86% of all iXBRL filings with the SEC have been submitted through Wdesk. As the leading technology solution for SEC XBRL disclosures, Wdesk is also leading the way in iXBRL with proven success in more than 50 individual filings.
For companies already using Wdesk, the move to iXBRL should have minimal disruption since the Wdesk platform is iXBRL-ready, and the process to file iXBRL will be the same Wdesk process already successfully used by 2,700+ organizations.
Workiva applauds the SEC’s proposal, which has a 60-day public comment period that concludes in May. Workiva expects the rule to be approved this year, possibly mandating iXBRL by 2018.
The SEC notice of the availability of the IFRS Taxonomy is a material event for foreign private issuers. The SEC's statement notes:
Foreign private issuers that prepare their financial statements in accordance with IFRS as issued by the IASB and are subject to Rule 405 may immediately begin submitting their financial statements in interactive data format. Although existing Rule 405 would require foreign private issuers that prepare their financial statements in accordance with IFRS as issued by the IASB to submit financial data in XBRL upon publication of the taxonomy, the Commission is providing notice that such issuers may first submit financial data in XBRL with their first annual report on Form 20-F or 40-F for a fiscal period ending on or after December 15, 2017.
In this notice, the SEC stated that foreign private issuers filing to the SEC can begin filing in IFRS with XBRL immediately. However, they will be required to submit their annual reports to the SEC in IFRS with XBRL for fiscal years ending on or after Dec. 15, 2017.
With the Dec. 15, 2017 cutoff date, the clock is now ticking for foreign private issuers that do not have processes or technology to support XBRL filings to the SEC. Although the SEC XBRL filing process is performed thousands of times quarterly by U.S. publicly listed companies, the use of technology like the Wdesk platform can significantly reduce the time and effort required in this filing effort and can drive efficiencies across the financial reporting process.
Overall, the SEC announcements on iXBRL and IFRS should be considered significant milestones in the evolution of financial disclosure and highlights how technology continues to be a driving force in the modernization of financial reporting.