6/30 FYE Filers have only 9 months versus a year to prepare for DFN

Companies with fiscal year ends between June 15th and September 14th (or "6/30 Filers") have only nine months to prepare for detail note tagging, instead of the year long period the SEC affords fiscal year end companies. The SEC has tried to have US-based companies following GAAP start their XBRL mandate efforts on a 10-Q versus a 10-K. Unfortunately they fell short when it comes to 6/30 Filers starting their detail / Year 2 tagging.

The information contained on page 59 and pages 179-180 of the Final Rule further explains the ruling. On page 59 it says:

To allow filers time to become familiar with tagging footnotes, in each filer’s first year of interactive data reporting, only level (i) will be required. All four levels will be required starting one year from the filer’s initial required submission in interactive data.

Per this instruction, the initial XBRL submission is on the 10-Q and the initial detail / Year 2 tagging should begin a year later on the 10-Q.  For a 6/30 Filer, one year from the filer's initial required submission would be the company’s 9/30 10-Q. However, pages 179-180 effectively shut the door on page 59’s guidance in two ways. Here’s the specific discussion of when a company can file Year 1 tagging:

"...if none of the financial statements for which an Interactive Data File is required is for a fiscal period that ends on or after June 15, 2010."

Applied to Year 2 tagging, this means that ANY submission with statements that involve data for periods on or after June 15th must be in detail / Year 2 tagging. By not specifically excluding the 10-K in this wording, the SEC steps away from its effort to avoid having companies do something around interactive data for the first time on a 10-K. Instead of getting a full year to prepare for Year 2 tagging, 6/30 Filers get only 9 months. The guidance on pages 179-180 solidifies the fact that 6/30 Filers must do their first detail / Year 2 tagging submission based on their 10-K, while all other US GAAP filer except for accelerated companies get started on a 10-Q.

Here’s an implementation schedule that maps out the deadlines based on a company’s fiscal year end:   

Fiscal Year End	1st Block Note Tagging	Block Note Tagging	Block Note Tagging	Block Note Tagging	1st Detail Note Tagging
9/30/2010	6/30/2011 Q	9/30/2011 K	12/31/2011 Q	3/31/2012 Q	6/30/2012 Q
10/31/2010	7/31/2011 Q	10/31/2011 K	1/31/2012 Q	4/30/2012 Q	7/31/2012 Q
11/30/2010	8/31/2011 Q	11/30/2011 K	2/29/2012 Q	5/31/2012 Q	8/30/2012 Q
12/31/2010	6/30/2011 Q	9/30/2011 Q	12/31/2011 K	3/31/2012 Q	6/30/2012 Q
1/31/2011	7/31/2011 Q	10/31/2011 Q	1/31/2012 K	4/30/2012 Q	7/31/2012 Q
2/28/2011	8/31/2011 Q	11/30/2011 Q	2/29/2012 K	5/31/2012 Q	8/31/2012 Q
3/31/2011	6/30/2011 Q	9/30/2011 Q	12/31/2011 Q	3/31/2012 K	6/30/2012 K
4/30/2011	7/30/2011 Q	10/31/2011 Q	1/31/2012 Q	4/30/2012 K	7/31/2012 Q
5/31/2011	8/31/2011 Q	11/30/2011 Q	2/29/2012 Q	5/31/2012 K	8/31/2012 Q
6/30/2011	9/30/2011 Q	12/31/2011 Q	3/31/2012 Q		6/30/2012 K
7/31/2011	10/31/2011 Q	1/31/2012 Q	4/30/2012 Q		7/31/2012 K
8/31/2011	11/30/2011 Q	2/29/2012 Q	5/31/2012 Q		8/31/2012 K

XBRL Registration Statements, Part Deux

Before we address take-aways from the 23rd XBRL International Conference in Montreal, it's worth discussing some open items around XBRL requirements for Registration Statements.  Companies continue to have questions about real-life Registration Statement situations, whether they involve missing XBRL data entirely, incomplete XBRL submissions, or which taxonomy to use.

Building upon our initial decision-criteria conversation around XBRL and Registration Statements, let's take a look at three specific scenarios and explore the XBRL requirements to each.

Scenario #1:  An already-mandated registrant includes mandate-relevant financial information (statements, notes) of a wholly owned subsidiary that does not have current quarterly/annual reporting obligations to the SEC. 

• QUESTION:  Does the subsidiary's data need to be provided in XBRL?
• ANSWER:  Yes, it does.  A correct XBRL submission for this S-4 would include XBRL for both the primary registrant and the wholly owned subsidiary.

Scenario #2:  A registrant that does not have current quarterly/annual reporting requirements to the SEC includes mandate-relevant financial information in an S-4 for an already-mandated registrant that contains data on/after the registrant started providing XBRL to the SEC.

• QUESTION:  Does the S-4 have XBRL requirements?
• ANSWER:  Yes, the S-4 would need to have XBRL included since it includes financial information from a registrant that's already impacted by the mandate.

Scenario #3:  A registration statement includes mandate relevant financial information that involves 10-K content that was originally submitted using the 2009 US GAAP taxonomy and 10-Q information that was originally submitted using the 2011 US GAAP taxonomy.

• QUESTION:  What taxonomy(ies) should be used for the submission?
• ANSWER:  An XBRL submission can use only a single primary (US-GAAP) taxonomy.  Assuming both taxonomies originally used are still supported by the SEC, the XBRL submission for this Registration Statement must be based on one or the other taxonomy, but it can't be based on both (2009 and 2011).  Given that no matter what decision the registrant makes, the result will involve new tagging work, it's our recommendation to use the most recent taxonomy (2011 in this case) versus the older one (2009).

With XBRL submissions for Registration Statements, it’s helpful to raise the questions and prepare ahead of time in order to avoid being out of compliance with the mandate.  Learn more with RR Donnelley's helpful guide - XBRL Requirements for Registration Statements.

XBRL and 8-Ks: One Word Makes All the Difference

The previous post’s discussion of XBRL requirements for Registration Statements might give rise to the assumption that the review of XBRL requirements for 8-Ks would be similar. The good news is that, in general, the entry point is very similar, but in terms of the final determination there's an interesting twist.  

Since 8-Ks and Registration Statements can contain one or more sets of financial information, the initial decision layer is pretty similar between the two:

• Has the company already submitted its first required XBRL documents?
• Does at least one reporting period occur when the company had already started the XBRL mandate (i.e. was this information originally provided in XBRL)?
• Is the mandate-required financial information (statements, notes, schedules) being included directly?
• Is the mandate-required financial information being represented in US GAAP (or IFRS once that mandate starts)? 

If the answer to any of the above is "No", then XBRL is most likely not required as part of the 8-K submission.  If, however, the answer to all of the above is "Yes", then it's on to the next decision layer - which is specific to the 8-K:

• Does the 8-K involve audited financial data?

If "No", then there is no XBRL requirement.  If "Yes", then XBRL is required but only for the audited information being included in the 8-K.  

"Why just audited financial data? What about the unaudited information that I previously submitted in XBRL the 8-K is also updating?" might be questions that come to mind.  The SEC's Final Rule on Interactive Data treats 8-Ks a bit differently from Registration Statements. Footnote 74 of the Final Rule introduces the audit-only restriction by stating:

"In connection with registration statements where historical financial statements are incorporated by reference, issuers often file under cover of Form 8-K or 6-K their revised audited annual financial statements..."

...while the supporting detail contained on pages 163-164 drives the restriction home:

"...and is required for a Form 8-K (§249.308 of this chapter) only when the Form 8-K contains audited annual financial statements that are a revised version of financial statements that previously were filed with the Commission that have been revised pursuant to applicable accounting standards..."

So, for those 8-Ks that contain both audited and unaudited data that fall within the rules governing a company being mandated to supply XBRL, the Final Rule is clear and requires only that audited information be submitted in XBRL.  

If asked, people at the SEC have been quick to confirm what's written in the Final Rule, but equally as quick in recommending that companies tag all mandate-impacted financial information, regardless of whether it is audited or not and whether it is similar to like circumstances found in registration statements.  

So, the choice is yours - follow what the SEC has written, or what they recommend.  All things being equal, erring on the side of the recommendation might not be such a bad thing.  There are, in fact, a number of XBRL 8-Ks being submitted that contain XBRL covering both audited and unaudited information. What's most important is to be aware of the situation and make an informed decision.

Speaking of, stay tuned for our next topic…a quick revisit to S-4 registration statements.

Registration Statements in XBRL: Trick or Treat?

Now that essentially all SEC registrants are creating XBRL documents for their K's and Q's, and with business development and IFRS-based companies’ time on the way, attention has shifted to other submissions impacted by the mandate.  Registration Statements and 8-K's are the topic de jour as quite a few companies are diving into understanding whether or not XBRL is required.

Let's save 8-K's for later and instead turn our attention to Registration Statements.  Although all of the underlying rules for this are found in the Final Rule on Interactive Data, there are enough moving parts to keep the discussion more than interesting.  

Consider the initial layer of decision criteria:

• Has the company already submitted their first required XBRL submission?  That would be a quarterly 10-Q for US registrants, or a 20-F/40-F for foreign private issuers.
• Is the form type an S-1, S-3, S-4, S-11, F-1, F-3, or F-4? (save for S-1s related to IPO's, which do NOT have XBRL requirements)

If the answer to either of these questions is "No", then it's likely that no XBRL requirement exists.   If however, both are "Yes", it's time to move to the next decision, this one focused on the content of the given Registration Statement:

• Has a price or price range been established?
• Does at least one reporting period occur when the company had already started/was required to start the XBRL mandate?
• Is the mandate-required financial information (statements, notes, schedules) being included directly (vs. incorporated by reference)?
• Is the mandate-required financial information being represented in US GAAP (or IFRS once that mandate starts)? 

If the answer to any one of these is "No", then it's likely that no XBRL requirement exists.  If, however, all are "Yes", then XBRL is most likely required. So far so good, right?  Unfortunately, it doesn't end here.  What comes into play next is determining the level of tagging required, as follows:

• If at least one reporting period occurs on or after the company having been required to block tag (i.e., Year 1 tagging), but no reporting periods fall on/after the company having to start detail tagging, then ALL mandate-required financial information must be block-tagged 
• If at least one reporting period occurs on or after the company having been required to detail tag (i.e., Year 2 tagging), then ALL mandate-required financial information must be detail-tagged

It's easy to overlook the simple fact that from the XBRL mandate perspective, Registration Statements and all the content contained within are treated as a single submission and not tied to how the original data (10-K, 10-Q) was originally and individually submitted.  A single reporting period that touches when a company had to start block-tagging, or detail-tagging, causes the entire Registration Statement to be covered by the XBRL mandate.

Worse-case scenarios, you ask?  There are two of them.  

First, it doesn't matter that a company's 10-K being included in the Registration Statement was before the company started submitting XBRL; if at least one time period in the Registration Statement is from when the company had to start tagging (i.e., from the most recent 10-Q also being included), then the 10-K data needs to be block-tagged.  

Second, if a company's 10-K was originally block-tagged but is now being included in a Registration Statement along with 10-Q data from when the company had to detail tag, then the both the 10-K and 10-Q data needs to be detail tagged as part of the Registration Statement submitted to the SEC.

 Trick or treat?  You be the judge, but quite honestly, it's neither.  This is definitely not a "trick" (confirm the above with your counsel and/or the SEC).  At the same time, it’s not clear that anyone sees potentially tagging more information than you originally had to as a "treat".  

 Yet there might be a treat coming up.  Potential good news lies just around the corner in our next discussion focused on 8-Ks.  Please stay tuned!

Note - Learn more with RR Donnelley's helpful guide - XBRL Requirements for Registration Statements.

XBRL US Conference Recap: And the Big News is...

The recently wrapped XBRL US National Conference in Nashville attracted almost 300 attendees  and contained in-depth XBRL discussions that ranged from more strategic (Corporate Actions, non-profits and comparability) to the more tactical (SEC submissions) in nature.  Of course a majority of the sessions focused on the latter, with a big emphasis placed on covering important topics related to basic and advanced tagging concepts.  Word of the conference in this regard:   Dimensions.  Be it simple dimensions for tagging multiple classes of common stock or complex examples for tagging Fair Value or adjustments on the statement of equity, dimensions played a key part in just about every presentation.

A big portion of the pre-conference excitement was focused on hearing what SEC Deputy Chief Accountant Mike Starr had to say during his keynote address.   His 30-minute presentation delivered some pretty interesting tidbits but in terms of big news items, here are the key take-aways:

1. XBRL data is being used for review/analytics purposes, the SEC has seen an increase in their "analytic licenses" 5x over the initial roll-out, and yes, they've sent out comment letters to some registrants already ("outliers")
2. The SEC is committed to resolving the IFRS "no action" position and sees the first half of 2012 as  being a key time period to move things forward; however, frustration with the IASB and IFRS taxonomy still exists and could prove to be problematic
3. When it comes to audit/attest around XBRL, it's in the future cards (albeit "distant future")

Those expecting more exciting news , or doom and gloom, were greatly disappointed.  While touching on market acceptance (slower had the SEC not mandated), capacity in the market (who said there wasn't enough?) and concurrent filing concerns (what concern? 95% filed concurrently this past filing season), Mike's comments played it safe and were void of any real controversy. While the update on IFRS was helpful, it essentially contained the same rhetoric from Mike's presentation in the UK a few months back, only this time with a "first half of 2012" message.  And was the comment about audit/attest of XBRL a sign of things to come, with XBRL sticking around for the long haul?  Only time will tell.

Supporting Mike at the conference was  the SEC's Tony Mealey and Ted Uehlinger.  They participated in panels involving basic and detail tagging, and reinforced key messages of "getting the data right" focused on signage and Rule/EFM requirements.  Based upon focus of their discussion points, it's a clear sign of items the SEC continues to see "suspect" in some decent percentage of XBRL filings and clearly a tell-tale sign of what companies/providers should be focused on.

So, big news?  Not really...not at this conference...but speaking of focus, next up is to spend a few minutes on a few Registration Statement issues sung in the tune of "Things that Make you Go Hmmmm."

 

X Marks the Spot

XBRL

To some it might mean interactive data.  To others, it could raise the specter of additional work at least 4 times a year.  Whatever your definition of XBRL, the global reporting standard appears to be here to stay and continues to create opportunities and challenges for internal accounting and reporting teams across the world.  Big or small, old or new, one thing’s for sure:  there’s still much to learn about XBRL.

Enter “X Marks the Spot”, RR Donnelley’s new blog focused on helping business professionals navigate the intricacies of creating XBRL documents for submission to regulators across the world, including the U.S. Securities and Exchange Commission (SEC) and U.K. HM Revenue & Customs.  Tagging or taxonomies got you down?  Concerned about regulatory next steps or how to ensure your XBRL is above the rest? 

Not to worry…”X Marks the Spot” is the place to be for factual, from-the-trenches issues related to XBRL.  Whether you prepare XBRL internally or outsource to a 3^rd party provider, “X Marks the Spot” will cover issues related to tagging, taxonomies, technical and regulatory rules, comparability and analytics.

Speaking of, XBRL US is hosting its 2-day national conference in Nashville this week.  Check back to learn key take-aways from the event including the scoop on the 3 sessions involving the SEC.