Comments on SEC XBRL Proposal

Looking through the comments by the issuing community (the public companies most affected by the proposal) a few common themes popped up. For the most part, issuers expressed general support for interactive data but had a number of reservations about the proposal. These are just general observations on my part. I didn't try to tally up the comments in any way.

It seems like the most anxiety was caused by the year 2 requirement for detailed Notes tagging. Issuers overwhelmingly pushed back on this part of the proposal. Some requested that the SEC stick with block tagging the Notes for the foreseeable future. A couple suggested that tagging down to the the 4th level of detail (all of the individual numbers) might work if the SEC only required a couple Notes in that format (by picking the most important, for instance Pensions always comes up in conversations around Notes tagging so it might be a candidate). Some said going to the 3rd level of detail was workable and sufficient. A couple of issuers didn't like the idea of tagging accounting policies or GAAP required disclosures because it might take those pieces of information and make them available out of context.

Another part of the proposal where a number of issuers had comments related to the grace period. Many wanted some type of grace period on all filings not just the first filing in each year. Also, issuers would rather not file on an amended version of their official document (10-K/A or 10-Q/A) if they take advantage of the grace period.

After speaking with a number of folks in person I can say that issuers are universally uncomfortable with this "perk" because they don't want to file an amendment to get the data in and would rather plan on filing concurrently if they have to. In the comments, issuers asked for the ability to use the grace period and then file on an 8-K or possibly a new form type that might be called 10-KX (or 10-QX).

The first option seems unlikely because it is difficult to tie the data submitted on an 8-K back to the source filing automatically unless the SEC requires as part of the filing a data field that would hold the accession number of the original filing. The second option seems unlikely as well because the SEC is actively trying to reduce the number of form types, not add to them.

One last common theme that stood out to me had to do with the first filing. Issuers would like to begin with a 10-Q rather than a 10-K and the way the proposal is set up the majority of issuers would have to start with their annual filing. The quarterlies have less information and are easier to tag. It makes sense. I was a surprised that the SEC wanted to start of during annual report season.

I wouldn't say that there were a large number of comments from the issuing community. We'll have to wait and see what weight the SEC gives to these comments and how they influence the final proposal.

-- Ed

Comments

[Punya]

Sir,

Your article has been highly informative. I wasn't aware of any such thing as Mandate prescribing as to the level of tagging at first level or in detail. I tried to search the SEC Mandate sir, but I couldn't find any details. If you can elaborate on it further & provide me with a link mentioning the details.

Regards,

Punya