The Financial Accounting Standards Board has released its final update of the 2016 GAAP Financial Reporting Taxonomy, pending acceptance by the Securities and Exchange Commission, to allow public companies to prepare to use it to complete their XBRL filings.
The GAAP taxonomy is a list of computer-readable tags in the XBRL format that allow companies to tag precisely the individual pieces of data in their financial statements and footnotes, enabling investors and other users of financial statements to more easily access and analyze such data. The SEC typically finalizes FASB’s taxonomy updates early in the new year, giving time for the earliest filers to rely on it.
FASB’s annual update exercise is meant to assure the taxonomy reflects the latest changes in accounting standards. It also enables FASB staff to make improvements to the taxonomy to make it simpler to navigate and more effective in reflecting financial information consistently across entities. The 2016 update in particular reflects changes suggested by the banking and insurance sector as well, FASB says.
Since 2011, when FASB staff made thousands of changes to the taxonomy to add elements and change definitions, the changes to the taxonomy have been far fewer in number. FASB has been striving to provide a more stable taxonomy to make it easier for companies to adapt each year. The biggest number of changes in 2016 were to eliminate elements, either because of changes in accounting rules or because they received little or improper use historically.
“For the 2016 taxonomy, stability continues to be a critical consideration, but the focus has shifted to simplifying the taxonomy by removing elements with low and inappropriate use and reducing redundancies and inconsistencies,” FASB wrote in its release notes to explain the latest changes. “This results in an increase in deprecations and changes to definitions over the prior release.”
The Securities and Exchange Commission has also taken some small steps in the past year to improve XBRL function with an update to its interactive data test suite. SEC staff updated the test suite, which is relied on by software developers to validate interactive data before submitting it to EDGAR, to reflect new sections of the draft EDGAR filing manual. The SEC is accepting comments on the changes.