SEC Rules for Reporting Financial Statements in XBRL Format 


    On January 30, 2009, the SEC adopted rules that would require companies to provide to the Commission financial statements in XBRL format, as well as posting to corporate websites (if companies maintain websites). These rules will apply to domestic and foreign companies using U.S. GAAP and to foreign private issuers using International Financial Reporting Standards as issued by the International Accounting Standards Board. These rules are effective April 13, 2009.

    IMPACTED DISCLOSURES:
    The XBRL data will be required, as an exhibit, with a company's annual and quarterly reports, transition reports, and Securities Act registration statements as well as reports on Form 8-K or Form 6-K that contain revised or updated financial statements. The tagged disclosures will include companies' primary financial statements (including balance sheet, income statement, statement of comprehensive income, statement of cash flows and statement of owners equity), footnote disclosures, and financial statement schedules. The disclosure in XBRL format will be submitted as an exhibit along with the traditional electronic filing formats in ASCII or HTML.

    PHASE-IN:
    The final rules will require a three year phase-in schedule beginning with a company’s first quarterly report on Form 10-Q, or annual report on Form 20-F or Form 40-F, that contains financial statements for fiscal periods ending on or after:

    • June 15, 2009 - the proposed rules would apply only to domestic and foreign large accelerated filers that use U.S. GAAP and have a worldwide public float above $5 billion (determined as of end their 2nd fiscal quarter of the most recent fiscal year), which is estimated to cover approximately 500 companies.
    • June 15, 2010- all other domestic and foreign large accelerated filers using U.S. GAAP would be subject to interactive data reporting (public float above $700 million determined as of end their 2nd fiscal quarter of the most recent fiscal year).
    • June 15, 2011- all remaining filers using U.S. GAAP, including smaller reporting companies, and all foreign private issuers that prepare their financial statements in accordance with IFRS as issued by the IASB would be subject to the same interactive data reporting requirements.

    INFORMATION TO BE TAGGED:
    The information to be tagged would include document and entity identifiers including: form type, company name and public float. §232.405 discusses content requirements and states that Interactive Data exhibit include no more no less than information in the elements of the primary financial statements, footnotes and financial statement schedules. GAAP filers will be required to select tags from the most recent list of tags for U.S. financial statement reporting, as released by XBRL U.S. and required by the EDGAR Filer Manual

    This would be accomplished by tagging the footnotes using four different levels of detail:

    1. Each complete footnote tagged as a single block of text;
    2. Each significant accounting policy within the significant accounting policies footnote tagged as a single block of text;
    3. Each table within each footnote tagged as a separate block of text; and
    4. Within each footnote, each amount (i.e., monetary value, percentage, and number) separately tagged.  The requirement to tag narrative disclosures was changed from the proposal as the SEC will permit, but not require, filers to tag, to the extent they choose, each narrative disclosure within the footnotes and financial statement schedules. In the first year of filing, a company will be required to tag at level one.

    During the first year submissions, the company will be required to tag at level 1 only.  After the first year, at all four detail levels will be required for the footnote disclosures.

    Providing interactive data for Management’s Discussion and Analysis (MD&A), executive compensation, or other financial, statistical or narrative disclosure is not required or permitted under the rules.

    TIMING:
    The XBRL exhibit will be required to be submitted to the SEC the same time as the related report or registration statement, with two exceptions.

    • A 30 day grace period will be permitted for the first interactive data exhibit of each filer (level 1 footnote detail),
    • A 30 day grace period will be permitted for the first interactive data exhibit that is required to include the footnotes and schedules tagged in detail (levels 2-4 footnote detail).

    Grace period submissions will be required to be filed with amended periodic reports (i.e., 10-KA, 10-QA). However, these submissions will only need to contain the relevant interactive data as an exhibit and therefore should not cause confusion that the amended report is being filed for any other reason.

    Filers will be required to provide the same interactive data that is submitted to the Commission on its corporate Web site, if it has one, on the earlier of the calendar day it filed or was required to file the related registration statement or report and remain posted for a period of at least 12 months.

    LIABILITY:
    The SEC will provide filers with limited liability for their XBRL financial statements for a period that will phase out over two years; the limited liability provision would terminate completely on Oct. 31, 2014.

    ASSURANCE:
    Interactive Data submissions will not be required to involve 3rd parties such as auditors or consultants for assurance. Auditors will not be required to apply AU Sections 550, 711 or 722 to interactive data provided in an exhibit or to the related viewable interactive data.

    Issuers can obtain third-party assurance under the PCAOB Interim Attestation Standard—AT sec. 101, Attest Engagements on interactive data, and can start and stop obtaining assurance whenever they choose. The rules do not require auditors’ reports to be tagged, however issuers are permitted to indicate in the financial statements (such as in a footnote) the degree of auditor involvement in the tagging process (i.e. disclosures regarding the level of auditor involvement or lack thereof in the creation of the interactive data exhibit).

    USE OF EXTENSIONS:
    The rule states that there should be limited use of extensions to circumstances where the appropriate financial statement element does not exist in the public taxonomy. In addition, wherever possible and when a standard element is appropriate, preparers change the label for a financial statement element that exists in the standard list of tags, instead of creating a new customized tag.

    Detail text of the entire rule can be found at:
    http://www.sec.gov/rules/final/2009/33-9002.pdf




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