xbrl and the sec ifrs taxonomy: impact on reporting teams · 2020-01-28 · ifrs xbrl mandate recap...

The contents of this presentation are confidential. Copyright © 2017 Workiva.

XBRL and the SEC IFRS

Taxonomy: Impact on

Reporting Teams

September 27, 2017

Presenters

Mike Rost

Vice President of Corporate Marketing, Workiva

Lisa Teofilo

Senior Manager of Professional Services, Workiva

Agenda

• IFRS XBRL Requirements

• Introduction to XBRL and IFRS 2016 Taxonomy

• XBRL Impact on Reporting Team—Best Practices

• XBRL Action Plan—Getting Started

IFRS XBRL Requirements

IFRS XBRL Requirements

• IFRS XBRL mandate recap

• Foreign private issuer SEC reporting

SEC XBRL - IFRS XBRL Mandate Recap

• A part of the original 33-9002 XBRL mandate issued in 2009

· Applies to Foreign Private Issuer (FPI)

· FPI reporting on US GAAP—already submitting XBRL

· FPI reporting on International Financial Reporting Standards (IFRS) as issued by the

International Accounting Standards Board (IASB)—no action until the SEC specified an IFRS

Taxonomy on its website

· Forms requiring XBRL:

· Annual reports on Form 20-F and 40-F

· 6-K containing revised or updated financials

· Transition reports on Form 20-F

· Securities Act registration statements on Form F-1, F-3, F-4, F-9, F-10 when financials are

included directly rather than incorporated by reference and after price range is included

· Forms not required but permitted:

· Exchange Act registration statements on Form 10, Form 20-F and 40-F

· Posting on corporate website on day XBRL is filed for at least 12 months

IFRS XBRL Mandate Recap

• March 1, 2017 SEC notice that the IFRS Taxonomy now available on the SEC

website

· FPIs may begin submitting XBRL immediately

· First required to include XBRL: annual report on Form 20-F and 40-F for fiscal period

ending after Dec. 15, 2017

· 30-day grace period available for first XBRL submission—available only once for the

reporting entity regardless of taxonomy (US GAAP or IFRS) or filing type (forms,

voluntary or required filing)

· With the Dec. 15, 2017 cutoff date, the clock is now ticking for FPIs that do not have

processes or technology to support XBRL filings to the SEC

Foreign Private Issuer SEC Reporting

• May present financial statements on:

· US GAAP (required to qualify for scaled disclosures for smaller reporting company)

· IASB IFRS

· Non-IASB IFRS/Home country accounting standards, with reconciliation to US

GAAP (under Item 18 of Form 20-F)

• FPI status measured at the end of second fiscal quarter:

· If failed, transition to domestic reporting status as of beginning of next fiscal year,

or immediately upon incorporating in the US

· I.e., FPI status failed June 30, 2017 => file 10-K for 2017 in Q1-2018

Subject to IFRS XBRL

Subject to US GAAP XBRL


• SEC reporting forms for FPI with XBRL requirements:

· FPI: Annual report on form 20-F, due four months after year-end

· Current report on form 6-K (material information), due promptly after material info is made

public. See Form Instructions C(6) for interactive data requirements.

* Audited annual financial statements previously filed with the commission being revised to reflect

certain subsequent events: i.) disc. operation, ii.) change in reportable segments or iii.) change in

accounting principle; or

* Current interim financial statements pursuant to Item 8.A.5 of Form 20-F: If the effective date of the

registration statement is more than nine months after the end of the last audited year, consolidated

interim financial statements covering at least the first six months of the financial year is required (and

state if unaudited)

* Interactive data required only as to such revised financial statements or current interim financial

statements regardless whether the Form 6-K contains other financial statements

Foreign Private Issuer SEC Reporting · FPI may voluntarily file on domestic forms (i.e., 10-K, 10-Q, 8-K, etc.)

* May file financials under IFRS (IASB) without reconciliation to US GAAP

* Must prominently disclose that the company meets the FPI definition but is voluntarily filing on

domestic forms

· Periodic interim reports

* Not subject to quarterly reporting under Exchange Act 13a-13/15d-13 (i.e., quarterly reports not

required, unless PFI chooses to file on domestic forms then the 10-Q requirement applies)

Foreign Private Issuer SEC Reporting (cont'd)

• Information covered by XBRL requirements

· Financial statements

· Footnotes

· Schedules

• Levels of XBRL tagging

· Level 1 – each complete footnote as a single block of text

· Level 2 – each significant accounting policy tagged as a single block of text

(including policy outside of the accounting policy note)

· Level 3 – each table within each footnote as a separate block of text

· Level 4 – each amount separately tagged (including amounts spelled out

in words)


• Internal Control Over Financial Reporting – To provide reasonable assurance

regarding the reliability of financial reporting and the preparation of financial

statements for external purposes in accordance with GAAP, subject to officer

certifications

· Interactive data falls within the scope of "disclosure controls and procedures." Filers

are required to consider interactive data controls in complying with Exchange Act

Rules 13a-15 and 15d-15 and Item 307 of Regulation S-K

· However, interactive data is excluded from officer certifications (not within the scope

of certifications about officers' responsibility for establishing and maintaining the

disclosure controls and procedures)


• Exempt from:

· Beneficial ownership report (Section 16a) for insiders

· Regulation FD (Fair Disclosure) requirements – material nonpublic information

disclosed to certain individuals or entities (e.g., securities market professionals such

as stock analysts, or holders of the issuer's securities), the issuer must make public

disclosure of that information

· Proxy rules (Exchange Act 3a12-3b)

Foreign Private Issuer XBRL Information

Resources

• Release 33-10320, 34-80128 IFRS Taxonomy

https://www.sec.gov/rules/other/2017/33-10320.pdf

• A Brief Overview for Foreign Private Issuers

https://www.sec.gov/divisions/corpfin/internatl/foreign-private-issuers-overview.shtml

• Division of Corporation Finance Financial Reporting Manual (Topic 6)

https://www.sec.gov/divisions/corpfin/cffinancialreportingmanual.pdf#topic6

• Division of Corporation Finance Compliance and Disclosure Interpretations

https://www.sec.gov/divisions/corpfin/guidance/interactivedatainterp.htm























Introduction to IFRS 2016 Taxonomy

IFRS 2016 Taxonomy Overview

• Developed on a standard-by-standard basis

• Annual release consists of multiple taxonomy updates issued by the IASB

• Available in various

languages

• Not developed

specifically for

SEC filing needs

IFRS Taxonomy Overview

Organized by taxonomy files and folders

Offers different

entry points for

various

combinations

IFRS Taxonomy Composition

• Consists of

· 2 sections related to management commentary

· 10 sections for face statements

· 50 sections for notes

· 6 sections for additional axes

• Contains 5,654 elements

**IFRS does not use typed axes

Reference role Occurrences

Disclosure 4,023

Example 780

Common practice 1,165

Substitution Group IFRS 2016 IFRS 2017

Elements 5,654 5,821

Monetary 2,516 2,601 String 1,550 1,579 Domain 615 635 Dimension [axis]** 143 148 Hypercube [table] 140 150

Text Block 507 519 Percent 81 81 Pure 7 7 Decimal 36 41 perShare 24 24 Shares 20 20 Date 15 15 Other - 1

In SEC

testing

XBRL element

• Element name

• Standard label

• Documentation

• Item type

• Period type

• Balance type

• Reference

• Tree locations

IFRS Taxonomy Composition—Element Composition

IFRS Taxonomy Modeling

IFRS axonomy is also modeled in two ways

• Hierarchical modeling

(line item concepts approach)

· Structured by parent-child relationships

• Axis modeling

(dimensional approach)

· Use of tables and axes


IFRS Taxonomy Line Item vs. Dimension

• Dimension – generally for disaggregating a reporting item Element Type Period Type Balance Type

Text Block Duration n/a

Text Block Duration n/a

Abstract Duration n/a

Table Duration n/a

Axis Duration n/a

Member Duration n/a

Line Items Abstract Duration n/a

String Duration

n/a

n/a

Credit

Credit

Debit

(Continue on next slide)


IFRS Taxonomy: line item vs. dimension

• Line item

Element Type Period Type Balance Type

Monetary Instant Debit


Monetary Duration Debit



Monetary Duration

Monetary Duration

Monetary Duration


Monetary Duration

Monetary Duration



Monetary Duration Credit

Monetary Duration Credit


Monetary Instant Debit


IFRS utilizes two types of axes

• Majority are "applied" axes

· Explicitly associated to one (or more) hypercube, with relationships to line items

IFRS utilizes two types of axes

• Six are "for application" axes

· Not explicitly connected to any hypercube

or line items

· Located at the end of the taxonomy

· May be used wherever applicable


SEC Implementation of IFRS 2016—Hierarchy

SEC enforces minor hierarchical differences compared to the

IFRS Taxonomy

• "Root" [abstract] in all sections

· Best practice – extend root abstract using the taxonomy section title

IFRS Taxonomy doesn't provide root abstract

except in the statement sections

EDGAR expects an abstract to start off each note

section or sub-section

SEC Implementation of IFRS 2016—Hierarchy SEC enforces minor hierarchical differences compared to the IFRS Taxonomy

• [Domain] in U.S. taxonomy instead of default [Member] for each axis

[member] elements are domainItemType, not to be confused with domain elements in UGT

IFRS 2016

UGT 2017

SEC Implementation of IFRS 2016—Hierarchy

SEC enforces minor hierarchical differences compared to the

IFRS Taxonomy

• [line items] is not indented under [table] in the IFRS Taxonomy

· Best practice – place [line Items] abstract under [table] at the same level as [axis]

IFRS 2016 UGT 2017

SEC Implementation of IFRS 2016—Categorization

SEC has more detailed categories

• SEC distinguishes between different types of text blocks (i.e., [policy text block] or

[table text block] distinction)

· "Disclosure of...[text block]" may be used for either Level 1 or 3 tagging as appropriate,

but [text block] corresponding to a [table] may be more applicable for Level 3 tagging

· "Description of accounting policy for...[text block]" are specific for Level 2 tagging

· Housed under [800600] Notes - List of accounting policies

For example — earnings per share note vs. table:

For Level 1 tagging

Best practice – Do not use the same text block for both

disclosure and table. Extend table text block as needed.

Appropriate for

Level 3 tagging

SEC Implementation of IFRS 2016—Element Selection

IFRS Taxonomy is a much smaller taxonomy compared to the UGT

• UGT 12,000+ elements for tagging vs. IFRS 5000+

· U.S. regulations (i.e., S-X, S-K) specific elements are not in IFRS Taxonomy, nor are

they intended to be

• SEC XBRL programs works with multiple taxonomies

• Shared reporting taxonomy under SEC consideration

· Carve out SX/SK specific elements into a separate taxonomy

· Sept. 1, 2017 began comment period

· Filers should research both taxonomies for available

elements

2017 UGT

2018 UGT

New SRT

IFRS Taxonomy has different element naming convention

• Taxonomy Notes include a 10-page style guide on element naming convention

· IFRS: "CurrentAssets" with standard label "Current assets"

· UGT: "AssetsCurrent" with standard label "Assets, Current"

• EFM 6.7.17 provides different guidance on naming convention, and as suggestions only not

authoritative

6.7.17 The id attribute of an xsd:element must consist of the Recommended Namespace Prefix of the

element namespace, followed by one underscore, followed only by its name attribute.

When constructing a name attribute, a common convention is to capitalize the first letter and use mainly lowercase

characters, using capitalization only to indicate a natural word break, for example

“CurrentPortionOfLongTermDebt”. Note the first character of a name attribute must not be underscore, and if the

name attribute is originally based on a label and in a subsequent version of the schema, the label changes, the

name attribute must not be changed merely to maintain agreement.

Best practice – When extending after UGT elements, keep the

same UGT element names. Follow EFM 6.7.17 on other

extensions.

SEC Implementation of IFRS 2016—Element Selection

SEC Implementation of IFRS 2016—Linkbase

IFRS supports formula linkbase that the SEC does not use

• SEC does not have

current plan to support

formula linkbase

· XBRL formula is an XBRL

standard released in 2009 to add

business rule validation in the form

of an additional XBRL linkbase

• DQC is evaluating formula

validations capabilities

Key steps in XBRL preparation

• Map elements and dimensions

• Set XBRL fact value (i.e., accuracy, positive/negative, unit)

• Manage XBRL outline

• Create XBRL calculations

• Validate errors

• Verify output

• Keep up XBRL with document changes until filing

XBRL Preparation Workflow

XBRL Impact on Reporting Team

Impact on Reporting Team

With the deadline set and a learning curve upon them, reporting teams will

need to create new filing processes and address fundamental questions:

• Are the right tools in place?

• Is the right team in place?

• Should in-house teams be trained?

• Is outsourcing some, or all of the work the right answer?

Impact on Reporting Team: Pro Tips

• SEC implementation of the IFRS includes differences that are not intuitive to new

XBRL filers by just looking at the taxonomy—finding a service provider that is

experienced in XBRL and the SEC is crucial.

• Many are trying to handle the requirement without additional staff. Not only is

finding the best solution for XBRL crucial, it is also important to find a solution

that will help realize time-savings in other existing parts of the reporting process,

so they can free up bandwidth for the incremental demand.

• Getting the shell document tagged and through the review process (between

service provider and filer) typically takes 3 months or more. Start the process

the process ASAP.

XBRL Action Plan

Action Plan: Five Steps on Getting Started

Having supported more than 2,400 organizations with SEC filings, our

experience suggests that the following steps be looked at to jump-start your

adoption to the SEC XBRL standards.

1. Seek knowledge and know the rules specific to filing XBRL with the SEC

2. Take an integrated approach to SEC filing

3. Manage risk and establish disclosure rules and procedures

4. Focus on data quality

5. Choose the right technology

Action Plan: Choose the Right Technology

• Leverage cloud technology · Accessibility, innovation, reliability, security, and affordability

• Improve data accuracy with a single source of truth · A single source of the truth will reduce errors and provide visibility into changes

• Reduce manual efforts · Increase efficiency and reduce time spent on non-value add activities

• Collaboration: Utilize a technology platform that supports real-time collaboration · Effectively communicate, share information and data with stakeholders

• Outsource what cannot be done internally · Recognize when you do not have the skill set or the bandwidth to perform all

assigned duties, and seek out resources to help accomplish goals

Regulatory Update: Inline XBRL

Keep in mind, the current regulatory environment is continuously evolving,

and now that you are an XBRL filer, you need to pay attention to how this

could impact your documents.

While iXBRL should not require any additional work or changes to existing

workflows, the filing community should look at the iXBRL proposal as a

positive step by the SEC and be sure to check with their service providers

on their capabilities. It both reaffirms the SEC commitment to digital

process and structured data, and the pursuit to continue to optimize the

XBRL filing process.

xbrl and the sec ifrs taxonomy: impact on reporting teams · 2020-01-28 · ifrs xbrl mandate recap...

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