Monday, March 6, 2017

The Securities and Exchange Commission decided last week to move forward with two big ideas in financial filings. First, the agency proposed to make Inline XBRL mandatory for companies’ SEC filings; and second, it also voted to require foreign private issuers to begin tagging their financial data in XBRL starting next year.

XBRL is the technology that allows financial data in companies’ SEC filings to be read by other machines… like, say, the databases here at Calcbench, which is why we follow XBRL so closely. It’s a tremendous technology that allows us to deliver the advanced analytics our subscribers know and love so well.

Inline XBRL is a new version of earlier XBRL technology that allows companies to embed their XBRL tags directly into their standard SEC filings. We’ve written about Inline XBRL previously and we’re big fans of the idea, but for Calcbench subscribers, Inline XBRL doesn’t affect you directly. In fact, Calcbench already simulates how Inline XBRL would appear to readers of financial data in the data presentations we give you now.

But expanding XBRL requirements to foreign private issuers—that’s a big deal. That will be good news for everyone who reads or analyzes financial data.

Foreign private issuers are overseas companies that trade less than 50 percent of their outstanding shares on U.S. markets. Instead of filing the typical Form 10-Q or Form 10-K, they file Forms 20-F or Form 40-F. Thanks to a quirk in SEC regulatory policy, they have not been required to submit financial data tagged in XBRL like U.S companies or foreign filers that trade a majority of shares on U.S. markets.

That loophole left a significant gap in the financial data that analysts could gather. Many “FPIs” are large companies in Europe or elsewhere—Sanofi, GlaxoSmithKline, Wipro; to name only a few—and they do provide plenty of financial information in their Forms 20-F or 40-F. But anyone wanting to bundle their financial data with information from XBRL-compliant filers must do so manually.

Well, that goes away starting next year.

The loophole was that many foreign private issuers file financial statements based on International Financial Reporting Standards, and the SEC had never designated an IFRS taxonomy so those filers could obey the XBRL requirement—which meant, therefore, that they were exempt from it.

Last week the SEC finally voted to adopt an IFRS taxonomy. So the XBRL requirement triggers, and foreign private issuers using IFRS must start complying with the XBRL rule for all filings on or after Dec. 15, 2017.

Starting sometime in 2018, then, consumers of financial information (such as Calcbench subscribers) will be able to see data from those foreign private issuers rolled into all the other data that other companies already report. Our databases will be that much more complete, and your analytics will be that much more comprehensive.

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