After a decade of traditional XBRL tagging of financial statements, the SEC has begun to require large accelerated filers to use the Inline XBRL format in their filings. Inline XBRL allows tags to be embedded directly into an HTML filing, providing a single format that is readable by both machines and humans. By moving to Inline XBRL for data on form covers and financial statements in reports, the SEC continues its quest to modernize financial reporting. It now proposes to amend most fee-bearing filing forms and rules so that each fee table and accompanying disclosure (footnotes) must be tagged in Inline XBRL. The proposal includes a standardized fee-table format/layout for all SEC form types, both to improve the HTML disclosures and to allow for consistent Inline XBRL tagging.
The SEC’s support for expanding Inline XBRL is further shown by proposed amendments to modernize financial disclosure requirements in Regulation S-K (see Release 33-10750, published on January 30, 2020). In its proposals, the SEC indicates it is considering whether the MD&A should be structured in Inline XBRL format, with either block tags, detailed tags, or a combination (see Question 57, page 96).
Worldwide, Inline XBRL is becoming the standard. For example, the European Single Electronic Format (ESEF) is the Inline XBRL mandate issued by the European Securities and Markets Authority. In effect from January 1, 2020, and with no phase-in schedule, all issuers on regulated markets within the EU and the European Economic Area must submit their annual financial reports in ESEF.
Accelerated filers need to prepare now
The final iXBRL rules have a three-year phase-in period. Large accelerated filers were phased in on June 15, 2019. From June 15, 2020, accelerated filers must follow the Inline XBRL rules; and all other filers will be phased in on June 15, 2021. The inline mandate for accelerated filers begins with the first Form 10-Q for fiscal periods on or after June 15, 2020. For companies with fiscal years ending on December 31, the mandate starts with the 10-Q for the second quarter. Accelerated filers should partner with a service provider now to successfully prepare for the SEC’s Inline XBRL requirements.
Six points to know for Inline XBRL
As the phase-in date for accelerated filers approaches in the United States, what practical lessons from the Inline XBRL of large accelerated filers can other filers use to prepare for their own filings?
When preparing the HTML cover, consider both how it will appear when filed and how the data will be tagged in Inline XBRL. SEC rules under the FAST Act require “all cover data to be tagged” for every periodic report (10-Q, 10-K, 8-K; 20-F and 40-F annual reports). Review the SEC’s template for each form type to ensure your filing matches the most current checkboxes and cover language. The 10-Q cover, for example, contains over 20 data points to be tagged.
The SEC has standardized cover items to ensure consistent reporting across companies and periods. That consistent “structure” allows the data to be tagged so a person or machine can read both the HTML and the XBRL data. The 10-K cover includes more information than it did last year, including the FAST Act table. Cover tagging should align with the HTML cover, ensuring an issuer is accurately telling investors its financial story.
2. Form 8-K filings
Under the final Inline XBRL rule, every Form 8-K requires cover tagging, even those without financials. While financial professionals manage quarterly and annual financial disclosures, legal counsel manages most 8-K filings. Consequently, lawyers who manage 8-K submissions are now exposed to XBRL requirements. Issuers should engage with their legal staff to prepare for the new 8-K requirements in a timely manner.
3. Exhibit index
Under the final Inline XBRL rule, Exhibit 104 (“Cover Page Interactive Data File”) is used for cover tagging. However, the SEC did not program Exh. 104 on EDGAR, so it cannot be attached to a submission. Rather, the Exh. 101 fileset used for XBRL financial statements is also used for cover tagging. Issuers are compliant with the Exh. 104 requirements by using Exh. 101 instead. This affects the exhibit index for filings with Inline XBRL.
In Form 8-K, the content of the exhibit description and listing depends on whether any other exhibits are included in the filing. [See the SEC staff’s guidance on this topic (Question 101.04).] In Forms 10-Q, 10-K, and 20-F or 40-F annual reports, Exhibits 101 and 104 should both be listed, with 104 cross-referenced to 101. For example:
101.INS XBRL Instance Document — the instance document does not appear on the Interactive Data File
because its XBRL tags are embedded within the Inline XBRL document
101.SCH XBRL Taxonomy Extension Schema Document
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF XBRL Taxonomy Extension Definition Linkbase Document
101.LAB XBRL Taxonomy Extension Label Linkbase Document
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document
104 Cover Page Interactive Data File — the cover page interactive data file does not appear in the
Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
Note that the word Inline is required in the exhibit index for any filing with Inline XBRL.
4. Test filing
Review the EDGAR test-filing message for any warnings. With Inline XBRL tagging residing within the HTML coding, EDGAR now validates most cover data, since the SEC has programmed EDGAR to check both cover and financial tagging. When test-filed, any errors produce a validation warning. Service providers should review the test-filing message for warnings; companies should address any warnings and errors. Even if everything appears to be accurate on the cover, some cover-tagging issues do not appear until the test filing. Any warnings must be resolved to ensure the accuracy of the data being reported. The EDGAR system will suspend a filing with an XBRL error (not a warning).
5. Financial statements
XBRL quality matters. In 2018, the SEC updated the EDGAR system to validate some XBRL-tagging issues, such as an incorrect negative value. Inline XBRL tags are visible in the SEC’s viewer* when a filing is disseminated. Issuers should work with their service providers to check for accuracy. (Note that the SEC will not be supporting the Inline Viewer in the future; go to Arelle Viewer instead.)
6. Registration statements
Does the registration statement require Inline XBRL tagging? Once a company is mandated to submit its 1934 Act filings with Inline XBRL, any registration statement that includes full financial statements must have the financial data tagged for Inline XBRL.
To read the full article in Dimensions Vol. 2020, No. 2, click here.
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