This blog originally appeared on Workiva.com, posted July 13th, 2018.
As we reach the halfway point of 2018, many initiatives that could reshape financial reporting are starting to gain traction. Regulatory agencies and advocacy groups are taking steps to help modernize the way companies report and disclose financial statements. Here are the latest notable news items you should be aware of, gathered from across the industry.
SEC approves iXBRL mandate
On June 28, 2018, the SEC announced it will begin requiring the use of the Inline eXtensible Business Reporting Language (iXBRL) format for the submission of operating company financial statement information and fund risk/return summary information and related changes.
This move will affect operating companies and funds, who will be able to submit a single human- and machine-readable filing and eliminate the need to post XBRL data on their websites. iXBRL adoption will take place in phases for periods ending on or after June 15, 2019 through June 15, 2021, depending on your filing status. You can read the full notes from the SEC open meeting here.
Workiva applauds the SEC on its decision to move forward with iXBRL, which will improve the quality and accessibility of data and continue the modernization of disclosures. For more information on how Workiva can support you during the transition to the inline format, visit our XBRL and iXBRL resource page.
SEC looking into expanded use of risk and data analytics
The Securities and Exchange Commission (SEC) recently published a draft of its Strategic Plan for 2018–2022. The agency listed three key goals for that time period:
- Goal 1: Focus on the long-term interests of Main Street investors
- Goal 2: Recognize significant developments and trends in capital markets and adjust efforts to ensure effective allocation of resources
- Goal 3: Enhance the SEC's analytical capabilities and human capital development
A closer look at the last goal shows that the SEC plans to ramp up its use of data analytics. The SEC is taking a page out of many a public companies' playbooks. While businesses leverage big data to predict and appropriately respond to market changes, the SEC sees an opportunity to establish data as a resource across the agency, enabling rigorous analysis at reduced cost. The SEC plans to invest in needed data streams, deploy new technological tools where appropriate, and improve its enterprise data management practices and infrastructure.
The SEC would also use its enhanced analytics of market and industry data to help prevent improper behavior and protect investors. The SEC believes increased analytics will strengthen its enforcement and examination programs and facilitate new ways to monitor, uncover, and prosecute violations of federal securities laws.
The SEC's plan is currently out for a 30-day comment period. Watch this space for more details.
XBRL US forming group on data standards in government reporting
XBRL US, a nonprofit community dedicated to improving reporting, is launching a new working group focused on bringing financial data standards to state and local government reporting.
According to XBRL US, at least one-third of the 90,000 state and local governments produce Comprehensive Annual Financial Reports (CAFRs). Currently, there is no standardization or required machine-readability in place for these types of reports. Without consistency between reports, the process of aggregating data and comparing performance of government entities is difficult and costly.
The XBRL US working group will address this problem by designing schemas and XBRL implementation(s) for open data reporting of state and local government actual financial results.
The working group is targeting improvements for Comprehensive Annual Financial Reports (CAFRs), Single Audit packages, state-mandated Annual Financial Reports (AFRs), and responses to relevant Census Bureau financial surveys. The goal of the group is to establish best practices for disclosure modernization that will benefit U.S. state and local governments, as well as public pension systems.
XBRL US has provided a preview of materials the working group will develop.
What's next for reporting
These latest moves by the SEC and XBRL US signify that XBRL will continue to play a major role in the future of reporting. Pressures are being placed on standardization for all areas of reporting, in order to enable faster, more reliable, and more thoughtful analysis of those reports—whether by regulators, investors, or internal stakeholders.
The rumblings throughout the industry reinforce the words of Workiva CEO Marty Vanderploeg when he told Accounting Today that a new era of XBRL is on its way: “I don’t think anybody doubts that’s going to happen. It’s just a matter of when. The rest of the world uses the inline format.”