With the support of the 2021 US GAAP Taxonomy, the SEC made additional updates to their EDGAR system that includes expanding their XBRL validation rules for additional data quality checks. These tests will be a subset of data quality rules that are already tested by the Data Quality Committee (DQC) and included within Workiva. As part of this update, if a filer does encounter one of these data quality checks, they will likely see a DQC error as well as a SEC warning as part of their XBRL generation.
Summary of Expected SEC Data Quality Rules
Here is a list of the DQC’s rules that have been added to SEC’s EDGAR Validations:
Most Impactful Rules
To help filers better understand some of the common mistakes and how to resolve these issues, we have provided some key areas to consider when addressing these errors:
- DQC Rule 0001 (Axis with Inappropriate Members) tests whether axes within the US GAAP taxonomy have inappropriate members. A common mistake we observed was the use of the “Equity [Member]” with the “Equity Components [Axis]” on the Statement of Stockholders Equity. Filers may have unnecessarily added this Axis/Member combination to the ‘total’ equity values column. As the ‘total’ values are typically the entity-wide values, Axis/Member application is not expected. Filers should review their combinations and either replace the Axis or Member or remove Axis/Member if deemed not necessary as illustrated in our example above.
DQC Rule 0004 (Element Values are Equal) tests the logic of values for elements that have an accounting relationship. This rule uses the accounting relationships (i.e. Assets = Current Assets + Noncurrent Assets) to check values reported in a filing are consistent to accounting expectations.
Example Filer Disclosure:
Based on this predefined accounting relationship, the values for “Property, Plant and Equipment, Net” would be excluded from the logic test to sum to total assets. “Property, Plant and Equipment, Net” is a component (contributor) of “Assets, Noncurrent” in the US GAAP Taxonomy. Therefore, “Assets, Noncurrent” element should be replaced with “Other Assets, Noncurrent” as this value represents all other noncurrent assets excluding property, plant and equipment.
- DQC Rule 0015 (Negative Values) test flags facts with negative values for a given list of elements not expected to have a negative value. The US GAAP taxonomy is designed so that the majority of elements are reported with positive XBRL values. Common mistakes observed included values presented as negative for visual reporting purposes, but the XBRL fact value was not made positive to match the intent of the element. Another common cause of error is that the selected element was not the most appropriate element for the disclosure or related transaction. Here, filers needed to replace the element.
Have Feedback On DQC Rules?
Workiva has worked closely with the DQC to provide feedback on rule refinement and exceptions to the tests. While filers continue to review and address data quality errors, we understand there may be additional scenarios subject to rule refinement. In order to continue to collect these scenarios and work to provide appropriate resolutions, if you have errors that you feel should also have exceptions or refinements to the rules, we want to hear that feedback. This survey will help gather information related to the rule, disclosure scenario, and refinement considerations we can review for further discussions with the DQC.
It is important to note that rule refinement may result in differences in validation results due to timing. The DQC continuously refines their rules throughout the year, while the SEC may only update periodically as part of other EDGAR releases. The difference in these processes may lead to a timing difference when an update is made to a DQC rule by the DQC, but prior to an update by the SEC. Filers should review carefully if an error is a result of such timing difference in order to determine the appropriate handling.