The American Institute of CPAs (AICPA) has submitted a comment letter to the U.S. Securities and Exchange Commission (SEC) on its proposed rule to require operating companies and mutual funds to use Inline XBRL (iXBRL) and embed tags in their financial statements and their risk/return summaries, respectively.
“The AICPA is a strong supporter of the application of data standards for the reporting of business information and we applaud the SEC for progressing its technology capabilities to keep up with the evolution of data standards,” the AICPA wrote in its May 16 comment letter. “The inline XBRL specification is used by millions of companies around the world to report their financial information.”
The AICPA expressed the belief that the use of iXBRL by filers will both enable enhanced capabilities for users of financial information, as well as provide efficiencies for preparers, but also pointed to the risk that financial statement users may be under the mistaken impression the auditor had involvement with XBRL tags that are embedded within the financial statements.
“We support the SEC in proposing amendments to require the use of iXBRL and we believe that iXBRL will enable enhanced capabilities for users of financial information as well as provide efficiencies for preparers,” the letter stated. “While we expect that those efficiencies that preparers gain in their processes should positively impact the quality of the XBRL files submitted, we recognize that the use of iXBRL will not address all errors. As stated previously, to help further address this issue, we recommend that the SEC continue to pursue efforts to improve data quality including encouraging filers to use tagging guidance and validation rules available in the market to help reduce errors in the XBRL formatted information.”
The AICPA also expressed the view that “when the XBRL formatted information is embedded within the HTML financial statements that are accompanied by auditors’ reports, we anticipate a widening expectation gap for financial statement users that will need to be addressed. As a result, in addition to continuing to monitor data quality, we believe the SEC has an important role to play in continuing to inform users of its positions regarding officer certifications and auditor involvement with iXBRL formatted information.”