After much speculation, the Securities and Exchange Commission (SEC) has released the long-awaited proposal requiring public companies based in the United States to utilize Inline XBRL (iXBRL) when submitting their financial statements and other public documents.
So what do you need to know about this proposal?
1. How iXBRL works: Inline XBRL is an updated version of the XBRL reporting format. This new format embeds HTML tags into different financial reports, allowing for the creation of one document that is both human and machine-readable. Previously, issuers were required to submit both a human-readable HTML document, as well as a machine-readable XBRL document. This innovative new system is expected to reduce the costs of having to submit multiple forms, as well as make financial information more accessible and easier to understand.
2. Requirement: The SEC will allow public companies to voluntarily report their periodic financial statements using iXBRL formats through March 2020. The purpose of the rule was to, according to the SEC, use a “voluntary, time limited program to assess the usefulness of this new filing format.” This unanimous decision was greeted with much enthusiasm from XBRL US, the US based segment of the XBRL International organization, as it is expected to provide further transparency for filers and their stakeholders.
3. iXBRL viewer: The SEC has provided an interactive viewer for companies to view their filings in iXBRL format. In order for this viewer to work, your filing agent must have first prepared the filing in iXBRL format. This video provided by the SEC includes relative information and instructions for using the viewer.
4. Required internationally: Inline XBRL formatting will also be required in Europe by the European Securities and Markets Authority (ESMA) starting in 2020. This format is prominent in both the UK and Japan, with over 3 million private and public companies already utilizing it.
With the impending reporting requirement in 2020, it is advised that public companies start utilizing iXBRL as soon as possible. The switch to iXBRL is expected to reduce costs and hassle in the long run.
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