Just before Independence Day, the SEC adopted amendments to its eXtensible Business Reporting Language (XBRL) reporting requirements, which will become effective 30 days after their publication in the Federal Register. (Although the amendments apply to both operating companies and funds, I’ll address only the impact on companies.)
The amendments will require, on a phased-in basis, that companies use Inline XBRL when submitting financial statement information. This means that XBRL data must be embedded directly into the company’s filing, rather than appended as a separate exhibit, and will be both human-readable and machine-readable. The amendments do not change the categories of filers or scope of disclosures subject to XBRL requirements.
Companies that are currently required to submit financial statement information in XBRL (including also smaller reporting companies, emerging growth companies, and foreign private issuers) must transition to Inline XBRL as follows:
- Large accelerated filers that use U.S. GAAP must comply beginning with fiscal periods ending on or after June 15, 2019.
- Accelerated filers that use U.S. GAAP must comply beginning with fiscal periods ending on or after June 15, 2020.
- All other filers must comply beginning with fiscal periods ending on or after June 15, 2021.
Filers will be required to comply beginning with their first Form 10-Q filed for a fiscal period ending on or after the applicable compliance date.
In addition, the requirement to post XBRL data on the company website will terminate upon the applicable effective date.
The SEC cites the following expected benefits of Inline XBRL:
- Reduced XBRL preparation time and effort by eliminating duplication and facilitating the review of XBRL data.
- Full control over the presentation of XBRL disclosures within the filing.
- Reduced likelihood of inconsistencies between HTML and XBRL filings and improved quality of XBRL data.
- Enhanced accessibility and transparency of the data and enhanced capabilities for data users, who no longer have to view the XBRL data separately from the text of the documents.
- Tools like the open source Inline XBRL Viewer are available to review and analyze the XBRL data more efficiently.
Next year’s second quarter Form 10-Q will be here before you know it. Now is a good time to be sure that your filing service or in-house filing personnel will be able to prepare filings in Inline XBRL format in advance of the prescribed deadline. Also, be sure everyone understands how this change in process will impact your internal document preparation and review calendars. Don’t let this disclosure improvement cause a last minute fire drill that compromises the review process or results in a missed filing date.