On June 21, 2018, the Securities and Exchange Commission (SEC) Chairman Jay Clayton told the House Financial Services Committee's subcommittee on capital markets that the agency will take action to adopt the inline XBRL format for corporate financial statements.
The Chairman's response showed that he sees the move from duplicative documents-plus-data financial reporting to single-version-data-centric as part of a broader modernization of the SEC's disclosure system.
On the same day, the SEC announced an open meeting to be held on June 28, 2018, which covers two rule proposals with an XBRL component:
- whether to adopt amendments to rules and forms to require the use of the Inline eXtensible Business Reporting Language (XBRL) format for the submission of operating company financial statement information and fund risk/return summary information and related changes.
- whether to adopt amendments to Form N-PORT and Form N-1A related to disclosures of liquidity risk management for open-end management investment companies.
It's about time that SEC amends the rules to adopt iXBRL as the filing format, after all, more than 150 companies have voluntarily filed more than 500 iXBRL formatted 10-Q's and 10-K's since 2016.
We collectively held our breath, and on June 28, 2018, it finally happened. In the morning of 6/28 the SEC voted, in a 4-to-1 vote, to enthusiastically approve a final rule requiring the use of Inline XBRL for both operating companies and mutual funds. The SEC has made it official: Inline XBRL is coming, and it's going to give the movement from paper to data some well-needed momentum. Well done, SEC!
Why is Inline XBRL Important?
Inline XBRL, also known as iXBRL, creates a single document that integrates both machine-readable metadata and human-readable HTML. The technology combines the advantages of both filing types into a single document that facilitates human reading as well as machine reading, and that’s really the primary benefit of Inline XBRL. Inline XBRL allows data tagging to be embedded directly into the text of an HTML document, thereby eliminating the need for separate exhibits for the XBRL data. The SEC believes that this will reduce the likelihood of inconsistencies, and we at idaciti concur.
A single version of the truth!
We know that context is key when reading financial disclosures and it is critical for accounting and finance professionals to be able to understand the overall context in which the numbers exist, as numbers alone don’t tell the whole story. iXBRL provides a friendly format that links the quantitative data and the qualitative data for both humans and machines to truly understand the financial disclosures.
Imagine that you can now analyze data and read the contextual discussion of that data in the same document.
Time Series Data Analysis Made Easy
The single version of the truth is the primary benefit, and the single document format also provides other benefits that investors and corporations can ONLY get from iXBRL- formatted financial reports.
For example, since each data point has metadata attached to it, it's now possible for computer applications that can read XBRL and have access to historical data sets to plot trending data right in the HTML report. Believe it or not, in the US, the XBRL data can go back to 2006. That is more than ten years worth of historical data that would be valuable for anyone doing time-series analyses.
You can also Benchmark Companies. After all, XBRL is Built for Comparability
With the embedded metadata, it's quite easy to compare a group of companies right in the HTML filing! You can pick any line item, and then add a number of companies to benchmark. It's that easy.
Inline XBRL is Going to Give the Movement of Moving from Paper to Data Well-Needed Momentum
In order to harness the true power of XBRL, it requires vision beyond the vision. Imagine an application that can take you beyond the historical data and analysis, beyond at-will customized interactive data – an application that feels like a hyperlink to your own virtual reality of financial data.
If you are a filer, now you can perform XBRL data validations and quality checks, review financial report disclosure requirements contained in FASB and IFRS Codification guidance and perform benchmarking analysis that identifies large variances and anomalies in your data – before and after filing.
If you are an investor, you don't need to spend hours and days to hunt for the data, and then scrape the data. You can simply start your analysis right in the filings.
The vision for that tool is now realized. Please meet the idaciti Inline XBRL Viewer.
And best of all, many of the features are free to use. Just contact us at info@idaciti.com, tell us a little about your interest in iXBRL, and we will be happy to provide you with free access to the iXBRL Portal.