On December 17, the Securities and Exchange Commission adopted rules requiring issuers to provide financial statements in interactive data format using eXtensible Business Reporting Language (XBRL) in periodic reports and registration statements filed with the SEC. The interactive data will be filed as an exhibit to an issuer’s financial statements and will supplement disclosure filed using the SEC’s traditional EDGAR electronic filing format. The XBRL requirements apply to domestic and foreign companies using U.S. GAAP, and will eventually apply to foreign private issuers using International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board.
To create interactive data files, issuers will be required to tag their financial statements using labels from a standard list of tags. In the first year of an issuer’s interactive data reporting, financial statement footnotes and schedules would only be tagged in block text (each financial statement note would require only one tag). Thereafter, issuers would also be required to tag detailed disclosures contained within their footnotes and schedules.
Interactive data reporting requirements will be phased in over a three-year period. Large Accelerated Filers that use U.S. GAAP and have a worldwide public float greater than $5 billion (approximately 500 companies) are required to begin including interactive data in their periodic reports and registration statements for fiscal periods ending on or after June 15, 2009 (the SEC’s original proposal suggested December 15, 2008). All other domestic and foreign Large Accelerated Filers using U.S. GAAP are required to begin including interactive data in their periodic reports and registration statements for fiscal periods ending on or after June 15, 2010. All remaining filers using U.S. GAAP and foreign private issuers that prepare their filings in accordance with IFRS are required to begin including interactive data in their periodic reports and registration statements for fiscal periods ending on or after June 15, 2011.
Each issuer will be permitted a 30-day grace period for the filing of its first interactive data exhibit and for its first filing that is required to include footnotes and schedules tagged in detail. Issuers that fail to include required interactive data by the appropriate date would be deemed not current with their Exchange Act reports, and as such would not be eligible to use short form registration statements and the resale exemptions of Rule 144 until the data are filed.
Interactive data files will be excluded from the Exchange Act’s officer’s certification requirements, and auditor assurance with respect to such data files will not be required. Under certain circumstances, interactive data files (i.e., the machine-readable XBRL data) will also be protected from liability during an issuer’s first two years of filing such exhibits.