The Securities and Exchange Commission ("SEC") will now require public companies (including operating companies, smaller reporting companies, emerging growth companies and foreign private issuers) that currently are required to submit their financial statement information using eXtensible Business Reporting Language ("XBRL") to use Inline XBRL ("IXBRL").

Currently, public companies are required to submit to the SEC financial statements and any applicable financial statement schedules in a separate XBRL exhibit. On June 28, 2018, the SEC adopted final rules which will require public companies to use IXBRL for the submission of financial statement information. IXBRL is a format that allows a company to embed data tagging directly in the text of an HTML document rather than tagging a copy of the information in a separate XBRL exhibit. With IXBRL, similar to existing practices, filers or filing agents would need to tag the required disclosures using the applicable taxonomy. As a part of the newly adopted final rule, the SEC has eliminated the website posting requirements for financial statement information.

The SEC expects that the use of IXBRL filing will improve the availability and usefulness of disclosures to investors, market participants and data users. Additionally, this move to both a human-readable and a machine-readable format may provide data quality improvements from improved validation, aggregation and analysis in the filing process. While the initial transition to IXBRL may result in additional costs to filers that need to change or update XBRL preparation software, the SEC expects that the overall costs of preparing data for submission to decrease over time.

Transition Timing

XBRL filers will be required to transition to IXBRL on a three-year phased basis to provide filers sufficient time to comply with the new requirements. The phase-in is as follows:

  • Large accelerated filers that prepare their financial statements in accordance with U.S. GAAP will be required to comply beginning with fiscal periods ending on or after June 15, 2019.
  • Accelerated filers that use U.S. GAAP will be required to comply beginning with fiscal periods ending on or after June 15, 2020.
  • All other filers will be required to comply beginning with fiscal periods ending on or after June 15, 2021.

A Quarterly Report on Form 10-Q filer will not become subject to the IXBRL requirements with respect to an Annual Report on Form 10-K or any other form, however, until after it has been required to comply with the IXBRL requirements for its first Quarterly Report on Form 10-Q for a fiscal period ending on or after the applicable compliance date for the respective category of filer. Thus, under the final rules, a calendar-year-end U.S. GAAP large accelerated filer will be required to use IXBRL beginning with its Quarterly Report on Form 10-Q for the quarter ending June 30, 2019 to be filed by August 9, 2019. A U.S. GAAP large accelerated filer with a June 30th fiscal year-end would be required to use IXBRL in its Quarterly Report on Form 10-Q for the quarter ending September 30, 2019 to be filed by November 12, 2019.

The final rules do not change the requirements regarding officer certifications and auditor assurance. The final rules continue to permit a company to state in financial statements (such as in a footnote) the degree of auditor involvement—or lack of auditor involvement—relating to financial statement information IXBRL data.

In preparation for this transition, filers should begin to evaluate whether they need to replace or update their XBRL preparation software and ensure that their filing agents are trained to comply with IXBRL requirements.

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