Your Guide to the 2018 US GAAP Taxonomy Update

Your Guide to the 2018 US GAAP Taxonomy Update

On March 12, the EDGAR system was updated to support the 2018 US GAAP Taxonomy (2018 UGT) and other SEC taxonomies releases. The 2018 Taxonomy brings a variety of changes, including elements updates, modeling changes, and new features, as well as a revised process for the release of new taxonomy modifications.

2018 US GAAP Taxonomy updates overview

The new taxonomy release introduced over 700 element additions and 1,800 existing element modifications. The chart below illustrates the top areas of change.

Changed Elements
New Elements References Definition/
Label/Type
Deprecated
Total 709 1,824 1,050 574
Financial Instruments 161 203 299 158
Fair Value 175 1 5 52
Income Statement (ASU 2014-09) Revenue 110 12 19 261
Cash Flow - 259 22 1
Retirement Benefits 38 83 53 20
Other 225 1,266 652 82

Of these changes, a few disclosure areas were significantly modified and are expected to affect most filers. Learn more about their 2018 impact in greater detail below.

Financial instruments-debt securities

A large amount of element modifications were included in this disclosure area based on the codification changes in ASU 2016-01. The ASU impacted primarily the classification and accounting treatment of equity securities. With Accounting Standards Update (ASU) 2016-01, equity securities can no longer be classified as available-for-sale (AFS) or accounted for using the cost method if the securities do not have readily determinable fair values.

As a result, from the XBRL perspective, depending on the types of securities previously included in AFS, disclosures may require remapping to AFS elements that are specific to debt securities only or new equity securities elements as applicable. The existing AFS elements are not yet deprecated for transitional reasons—therefore, an auto-migration path cannot be specified. Filers need to review for any mapping changes that may apply to them.

In addition, due to the equity securities classification change, the previous “Major Types of Debt and Equity Securities [Axis]" was deprecated and replaced by the “Financial Instrument [Axis]." This axis is commonly used in the investment as well as fair value disclosures and should be migrated accordingly.

Fair value inputs

The level 3 fair value input disclosure was remodeled in 2018. Specifically, the fair value measurement input in the valuation technique disclosure remodeling uses a dimensional approach. The different measurement inputs—such as default rate, offered price, etc.—are represented by a common measurement input element, but dimensionally differentiated by the respective input type [Member]s.

Note that different measurement input elements were also created for each type of financial instrument, such as debt instrument measurement input vs. derivative asset measurement input. The measurement input element requires a specific unit of measure based on the input type for which it is used. For example, an input type of default rate would have a different unit than offered price.

In addition, the Fair Value Hierarchy [Axis] was updated to Fair Value Hierarchy and NAV [Axis] with the addition of the NAV member, which was previously modeled as line item only. These changes to fair value modeling could potentially affect not only the element and dimension, but also the way the fact value is entered, the unit in the fact properties, etc., compared to prior tagging. Filers should review carefully and update accordingly.

Revenues and costs of revenue have been remodeled to dimensionally represent the disaggregation of types of product and services using the “Products and Services [Axis]." The previously existing line item elements specific to the types of revenues and costs were deprecated, and should be replaced with their dimensional equivalents in 2018.

Extensible list elements

In addition, there were also new extensible list elements created for these disclosure areas. For example, extensible list elements for the type of product and services which are applicable when the revenues or costs are not disaggregated, but the specific type of product and services is associated with the total amount. Extensible list is an element type that is intended for associating “additional information” with a fact that is not disaggregating an item into its components.

gYearListItem type

In addition to the remodeling work mentioned above, the FASB has also done a review of the existing gYearItem type elements for improvements. gYearItem type requires that the XBRL value be entered in the four digit CCYY format. For example, the tax year under examination being 2013. Since this type of disclosure can often involve multiple years, the data type has been updated to gYearListItem type to enable the input of XBRL value in the list format, such as “2012 2013 2014” for modeling simplicity.

Reference role

The new taxonomy includes many changes to the references of the elements. Reference is the first and foremost attribute in evaluating an XBRL element, according to the EDGAR Filer Manual Volume II (EFM 6.6.29).

In conjunction with the FASB special Reference Project, improvements were made in the 2018 Taxonomy to provide additional information by the roles of the references, including disclosureRef, recommendedRef, exampleRef, commonPracticeRef, and otherTransitionRef. These reference roles are purported to provide a structure to differentiate the sources of the requirements, such as whether the element corresponds to a specific paragraph in the codification, an encouraged disclosure, a suggestion in the implementation examples, or something that is not required but highly common in practice. The enhanced references with this additional information can be particularly useful in deciding whether an element is a proper match to the disclosure item at hand.

SEC Reporting Taxonomy (SRT)

Newly introduced this year is an addition to the SEC taxonomies that is called the SEC Reporting Taxonomy. The SRT contains XBRL tags for SEC specific financial and schedule disclosure requirements, as well as tags for condensed consolidating financials for guarantors and other disclosures about oil and gas activities.

This content was previously included in the US GAAP Taxonomy, but has been moved from the UGT into the SRT to support both US GAAP and IFRS XBRL filers in fulfilling these commission-specific requirements. With the addition of SRT, most IFRS XBRL filers are expected to no longer need to import the US GAAP Taxonomy for their IFRS filings with the SEC.

Taxonomy process improvement

In addition to the modifications in the taxonomy itself, this year the FASB also introduced a new exposure process for future taxonomy updates. Specifically, taxonomy changes related to ASUs will be provided for public comment concurrent with the proposed ASU, compared to the prior practice of an annual 60-day comment period on the entire taxonomy at the end of the year, around early fourth quarter.

This new process is expected to enable better alignment between the accounting standards and the corresponding XBRL structure. This is also expected to yield benefits to filers by making the necessary taxonomy edits available sooner, especially for the early adopters who may need the XBRL additions before the next annual release is available.

How should SEC filers approach taxonomy migration this year?

Similar to 2017, migration to this year's new taxonomy is expected to require major tagging updates for most filers. While the new taxonomy does provide migration paths for certain changes, they apply primarily to line item element replacement for deprecated elements, which may be only a small portion of the changes in 2018 for many filers.

Changes from deprecated elements to their corresponding remodeled dimensions, for example, are typically not built into the taxonomy. Filers should carefully evaluate all changes relevant to their filings and pay particular attention to updates that may require manual application.

To provide guidance to filers, the FASB does offer a number of available resources on the their website:

Filers are also highly encouraged to look for additional learning opportunities. Watch the Workiva calendar of events for upcoming webinars and workshops on filing best practices, XBRL tagging, and more.

Last, but not least, please keep in mind that the SEC strongly encourages you to use the most current version of the taxonomy for your filings. Even though the 2016 Taxonomy is not expected to be removed before June, for those who are currently utilizing the 2016 version, it would be prudent to have a plan in place well before the deadline. Due to the complexity of the changes and the common disclosure areas impacted, assistance from your service providers may also be a good path to a successful migration this year.