XBRL and the SEC IFRS Taxonomy: Impact on Reporting Teams · 2020-01-28 · IFRS XBRL Mandate Recap...
Transcript of XBRL and the SEC IFRS Taxonomy: Impact on Reporting Teams · 2020-01-28 · IFRS XBRL Mandate Recap...
The contents of this presentation are confidential. Copyright © 2017 Workiva.
XBRL and the SEC IFRS
Taxonomy: Impact on
Reporting Teams
September 27, 2017
Presenters
Mike Rost
Vice President of Corporate Marketing, Workiva
Lisa Teofilo
Senior Manager of Professional Services, Workiva
Agenda
• IFRS XBRL Requirements
• Introduction to XBRL and IFRS 2016 Taxonomy
• XBRL Impact on Reporting Team—Best Practices
• XBRL Action Plan—Getting Started
IFRS XBRL Requirements
IFRS XBRL Requirements
• IFRS XBRL mandate recap
• Foreign private issuer SEC reporting
SEC XBRL - IFRS XBRL Mandate Recap
• A part of the original 33-9002 XBRL mandate issued in 2009
· Applies to Foreign Private Issuer (FPI)
· FPI reporting on US GAAP—already submitting XBRL
· FPI reporting on International Financial Reporting Standards (IFRS) as issued by the
International Accounting Standards Board (IASB)—no action until the SEC specified an IFRS
Taxonomy on its website
· Forms requiring XBRL:
· Annual reports on Form 20-F and 40-F
· 6-K containing revised or updated financials
· Transition reports on Form 20-F
· Securities Act registration statements on Form F-1, F-3, F-4, F-9, F-10 when financials are
included directly rather than incorporated by reference and after price range is included
· Forms not required but permitted:
· Exchange Act registration statements on Form 10, Form 20-F and 40-F
· Posting on corporate website on day XBRL is filed for at least 12 months
IFRS XBRL Mandate Recap
• March 1, 2017 SEC notice that the IFRS Taxonomy now available on the SEC
website
· FPIs may begin submitting XBRL immediately
· First required to include XBRL: annual report on Form 20-F and 40-F for fiscal period
ending after Dec. 15, 2017
· 30-day grace period available for first XBRL submission—available only once for the
reporting entity regardless of taxonomy (US GAAP or IFRS) or filing type (forms,
voluntary or required filing)
· With the Dec. 15, 2017 cutoff date, the clock is now ticking for FPIs that do not have
processes or technology to support XBRL filings to the SEC
Foreign Private Issuer SEC Reporting
• May present financial statements on:
· US GAAP (required to qualify for scaled disclosures for smaller reporting company)
· IASB IFRS
· Non-IASB IFRS/Home country accounting standards, with reconciliation to US
GAAP (under Item 18 of Form 20-F)
• FPI status measured at the end of second fiscal quarter:
· If failed, transition to domestic reporting status as of beginning of next fiscal year,
or immediately upon incorporating in the US
· I.e., FPI status failed June 30, 2017 => file 10-K for 2017 in Q1-2018
Subject to IFRS XBRL
Subject to US GAAP XBRL
Foreign Private Issuer SEC Reporting
• SEC reporting forms for FPI with XBRL requirements:
· FPI: Annual report on form 20-F, due four months after year-end
· Current report on form 6-K (material information), due promptly after material info is made
public. See Form Instructions C(6) for interactive data requirements.
* Audited annual financial statements previously filed with the commission being revised to reflect
certain subsequent events: i.) disc. operation, ii.) change in reportable segments or iii.) change in
accounting principle; or
* Current interim financial statements pursuant to Item 8.A.5 of Form 20-F: If the effective date of the
registration statement is more than nine months after the end of the last audited year, consolidated
interim financial statements covering at least the first six months of the financial year is required (and
state if unaudited)
* Interactive data required only as to such revised financial statements or current interim financial
statements regardless whether the Form 6-K contains other financial statements
Foreign Private Issuer SEC Reporting · FPI may voluntarily file on domestic forms (i.e., 10-K, 10-Q, 8-K, etc.)
* May file financials under IFRS (IASB) without reconciliation to US GAAP
* Must prominently disclose that the company meets the FPI definition but is voluntarily filing on
domestic forms
· Periodic interim reports
* Not subject to quarterly reporting under Exchange Act 13a-13/15d-13 (i.e., quarterly reports not
required, unless PFI chooses to file on domestic forms then the 10-Q requirement applies)
Foreign Private Issuer SEC Reporting (cont'd)
• Information covered by XBRL requirements
· Financial statements
· Footnotes
· Schedules
• Levels of XBRL tagging
· Level 1 – each complete footnote as a single block of text
· Level 2 – each significant accounting policy tagged as a single block of text
(including policy outside of the accounting policy note)
· Level 3 – each table within each footnote as a separate block of text
· Level 4 – each amount separately tagged (including amounts spelled out
in words)
Foreign Private Issuer SEC Reporting
• Internal Control Over Financial Reporting – To provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with GAAP, subject to officer
certifications
· Interactive data falls within the scope of "disclosure controls and procedures." Filers
are required to consider interactive data controls in complying with Exchange Act
Rules 13a-15 and 15d-15 and Item 307 of Regulation S-K
· However, interactive data is excluded from officer certifications (not within the scope
of certifications about officers' responsibility for establishing and maintaining the
disclosure controls and procedures)
Foreign Private Issuer SEC Reporting
• Exempt from:
· Beneficial ownership report (Section 16a) for insiders
· Regulation FD (Fair Disclosure) requirements – material nonpublic information
disclosed to certain individuals or entities (e.g., securities market professionals such
as stock analysts, or holders of the issuer's securities), the issuer must make public
disclosure of that information
· Proxy rules (Exchange Act 3a12-3b)
Foreign Private Issuer XBRL Information
Resources
• Release 33-10320, 34-80128 IFRS Taxonomy
https://www.sec.gov/rules/other/2017/33-10320.pdf
• A Brief Overview for Foreign Private Issuers
https://www.sec.gov/divisions/corpfin/internatl/foreign-private-issuers-overview.shtml
• Division of Corporation Finance Financial Reporting Manual (Topic 6)
https://www.sec.gov/divisions/corpfin/cffinancialreportingmanual.pdf#topic6
• Division of Corporation Finance Compliance and Disclosure Interpretations
https://www.sec.gov/divisions/corpfin/guidance/interactivedatainterp.htm
Introduction to IFRS 2016 Taxonomy
IFRS 2016 Taxonomy Overview
• Developed on a standard-by-standard basis
• Annual release consists of multiple taxonomy updates issued by the IASB
• Available in various
languages
• Not developed
specifically for
SEC filing needs
IFRS Taxonomy Overview
Organized by taxonomy files and folders
Offers different
entry points for
various
combinations
IFRS Taxonomy Composition
• Consists of
· 2 sections related to management commentary
· 10 sections for face statements
· 50 sections for notes
· 6 sections for additional axes
• Contains 5,654 elements
**IFRS does not use typed axes
Reference role Occurrences
Disclosure 4,023
Example 780
Common practice 1,165
Substitution Group IFRS 2016 IFRS 2017
Elements 5,654 5,821
Monetary 2,516 2,601 String 1,550 1,579 Domain 615 635 Dimension [axis]** 143 148 Hypercube [table] 140 150
Text Block 507 519 Percent 81 81 Pure 7 7 Decimal 36 41 perShare 24 24 Shares 20 20 Date 15 15 Other - 1
In SEC
testing
XBRL element
• Element name
• Standard label
• Documentation
• Item type
• Period type
• Balance type
• Reference
• Tree locations
IFRS Taxonomy Composition—Element Composition
IFRS Taxonomy Modeling
IFRS axonomy is also modeled in two ways
• Hierarchical modeling
(line item concepts approach)
· Structured by parent-child relationships
• Axis modeling
(dimensional approach)
· Use of tables and axes
IFRS Taxonomy Modeling
IFRS Taxonomy Line Item vs. Dimension
• Dimension – generally for disaggregating a reporting item Element Type Period Type Balance Type
Text Block Duration n/a
Text Block Duration n/a
Abstract Duration n/a
Table Duration n/a
Axis Duration n/a
Member Duration n/a
Line Items Abstract Duration n/a
String Duration
n/a
n/a
Credit
Credit
Debit
(Continue on next slide)
IFRS Taxonomy Modeling
IFRS Taxonomy: line item vs. dimension
• Line item
Element Type Period Type Balance Type
Monetary Instant Debit
Abstract Duration n/a
Monetary Duration Debit
Monetary Duration Debit
Monetary Duration Debit
Monetary Duration
Monetary Duration
Monetary Duration
Monetary Duration Debit
Monetary Duration
Monetary Duration
Abstract Duration n/a
Abstract Duration n/a
Monetary Duration Credit
Monetary Duration Credit
Monetary Duration Debit
Monetary Instant Debit
IFRS Taxonomy Modeling
IFRS utilizes two types of axes
• Majority are "applied" axes
· Explicitly associated to one (or more) hypercube, with relationships to line items
IFRS utilizes two types of axes
• Six are "for application" axes
· Not explicitly connected to any hypercube
or line items
· Located at the end of the taxonomy
· May be used wherever applicable
IFRS Taxonomy Modeling
SEC Implementation of IFRS 2016—Hierarchy
SEC enforces minor hierarchical differences compared to the
IFRS Taxonomy
• "Root" [abstract] in all sections
· Best practice – extend root abstract using the taxonomy section title
IFRS Taxonomy doesn't provide root abstract
except in the statement sections
EDGAR expects an abstract to start off each note
section or sub-section
SEC Implementation of IFRS 2016—Hierarchy SEC enforces minor hierarchical differences compared to the IFRS Taxonomy
• [Domain] in U.S. taxonomy instead of default [Member] for each axis
[member] elements are domainItemType, not to be confused with domain elements in UGT
IFRS 2016
UGT 2017
SEC Implementation of IFRS 2016—Hierarchy
SEC enforces minor hierarchical differences compared to the
IFRS Taxonomy
• [line items] is not indented under [table] in the IFRS Taxonomy
· Best practice – place [line Items] abstract under [table] at the same level as [axis]
IFRS 2016 UGT 2017
SEC Implementation of IFRS 2016—Categorization
SEC has more detailed categories
• SEC distinguishes between different types of text blocks (i.e., [policy text block] or
[table text block] distinction)
· "Disclosure of...[text block]" may be used for either Level 1 or 3 tagging as appropriate,
but [text block] corresponding to a [table] may be more applicable for Level 3 tagging
· "Description of accounting policy for...[text block]" are specific for Level 2 tagging
· Housed under [800600] Notes - List of accounting policies
For example — earnings per share note vs. table:
For Level 1 tagging
Best practice – Do not use the same text block for both
disclosure and table. Extend table text block as needed.
Appropriate for
Level 3 tagging
SEC Implementation of IFRS 2016—Element Selection
IFRS Taxonomy is a much smaller taxonomy compared to the UGT
• UGT 12,000+ elements for tagging vs. IFRS 5000+
· U.S. regulations (i.e., S-X, S-K) specific elements are not in IFRS Taxonomy, nor are
they intended to be
• SEC XBRL programs works with multiple taxonomies
• Shared reporting taxonomy under SEC consideration
· Carve out SX/SK specific elements into a separate taxonomy
· Sept. 1, 2017 began comment period
· Filers should research both taxonomies for available
elements
2017 UGT
2018 UGT
New SRT
IFRS Taxonomy has different element naming convention
• Taxonomy Notes include a 10-page style guide on element naming convention
· IFRS: "CurrentAssets" with standard label "Current assets"
· UGT: "AssetsCurrent" with standard label "Assets, Current"
• EFM 6.7.17 provides different guidance on naming convention, and as suggestions only not
authoritative
6.7.17 The id attribute of an xsd:element must consist of the Recommended Namespace Prefix of the
element namespace, followed by one underscore, followed only by its name attribute.
When constructing a name attribute, a common convention is to capitalize the first letter and use mainly lowercase
characters, using capitalization only to indicate a natural word break, for example
“CurrentPortionOfLongTermDebt”. Note the first character of a name attribute must not be underscore, and if the
name attribute is originally based on a label and in a subsequent version of the schema, the label changes, the
name attribute must not be changed merely to maintain agreement.
Best practice – When extending after UGT elements, keep the
same UGT element names. Follow EFM 6.7.17 on other
extensions.
SEC Implementation of IFRS 2016—Element Selection
SEC Implementation of IFRS 2016—Linkbase
IFRS supports formula linkbase that the SEC does not use
• SEC does not have
current plan to support
formula linkbase
· XBRL formula is an XBRL
standard released in 2009 to add
business rule validation in the form
of an additional XBRL linkbase
• DQC is evaluating formula
validations capabilities
Key steps in XBRL preparation
• Map elements and dimensions
• Set XBRL fact value (i.e., accuracy, positive/negative, unit)
• Manage XBRL outline
• Create XBRL calculations
• Validate errors
• Verify output
• Keep up XBRL with document changes until filing
XBRL Preparation Workflow
XBRL Impact on Reporting Team
Impact on Reporting Team
With the deadline set and a learning curve upon them, reporting teams will
need to create new filing processes and address fundamental questions:
• Are the right tools in place?
• Is the right team in place?
• Should in-house teams be trained?
• Is outsourcing some, or all of the work the right answer?
Impact on Reporting Team: Pro Tips
• SEC implementation of the IFRS includes differences that are not intuitive to new
XBRL filers by just looking at the taxonomy—finding a service provider that is
experienced in XBRL and the SEC is crucial.
• Many are trying to handle the requirement without additional staff. Not only is
finding the best solution for XBRL crucial, it is also important to find a solution
that will help realize time-savings in other existing parts of the reporting process,
so they can free up bandwidth for the incremental demand.
• Getting the shell document tagged and through the review process (between
service provider and filer) typically takes 3 months or more. Start the process
the process ASAP.
XBRL Action Plan
Action Plan: Five Steps on Getting Started
Having supported more than 2,400 organizations with SEC filings, our
experience suggests that the following steps be looked at to jump-start your
adoption to the SEC XBRL standards.
1. Seek knowledge and know the rules specific to filing XBRL with the SEC
2. Take an integrated approach to SEC filing
3. Manage risk and establish disclosure rules and procedures
4. Focus on data quality
5. Choose the right technology
Action Plan: Choose the Right Technology
• Leverage cloud technology · Accessibility, innovation, reliability, security, and affordability
• Improve data accuracy with a single source of truth · A single source of the truth will reduce errors and provide visibility into changes
• Reduce manual efforts · Increase efficiency and reduce time spent on non-value add activities
• Collaboration: Utilize a technology platform that supports real-time collaboration · Effectively communicate, share information and data with stakeholders
• Outsource what cannot be done internally · Recognize when you do not have the skill set or the bandwidth to perform all
assigned duties, and seek out resources to help accomplish goals
Regulatory Update: Inline XBRL
Keep in mind, the current regulatory environment is continuously evolving,
and now that you are an XBRL filer, you need to pay attention to how this
could impact your documents.
While iXBRL should not require any additional work or changes to existing
workflows, the filing community should look at the iXBRL proposal as a
positive step by the SEC and be sure to check with their service providers
on their capabilities. It both reaffirms the SEC commitment to digital
process and structured data, and the pursuit to continue to optimize the
XBRL filing process.
The contents of this presentation are confidential. Copyright © 2017 Workiva.
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