The proposed 2016 GAAP Taxonomy contains changes preparers will want to review before the Financial Accounting Standards Board finalizes it and sends it to the Securities and Exchange Commission for approval.
The proposed update to the GAAP taxonomy, which companies will follow to complete their XBRL filings with the SEC, contains the usual annual revisions as a result of changes in accounting standards, FASB says in its release notes explaining the changes. This year’s update reflects changes in accounting rules around simplifying the income statement and the presentation of debt issuance costs, consolidation analysis, measuring retirement benefits and intangible assets, fair value disclosures, transactions affecting earnings per share, business combinations, insurance disclosures, inventory measurement, and hedging.
The revised taxonomy also reflects changes brought on by FASB’s taxonomy simplification initiative launched in 2014. That has led to the removal of elements that are little used by preparers, elimination of inconsistent modeling, and the elimination of multiple ways of tagging the same facts. FASB says in 2015, it “deprecated” or removed 290 elements because they saw little or no use, they were redundant with other elements, or they were only relevant to a transition period that has passed.
For the 2016 update, FASB says it targeted for improvement elements with little or inappropriate use that were not related to specific guidance, as well as roll-forward elements that had inconsistent modeling. That led to more consistent definitions for “other” elements, FASB says, along with redundant dimensions and range elements that represented multiple ways to tag the same fact. “While some of these changes may impact a significant number of filers, the feedback received from constituents was to eliminate inconsistencies and ambiguities with the expectation of better data quality as a result,” FASB says.
The 2016 update also reflects changes recommended by FASB’s industry resource groups for insurance and financial services. The changes of interest to financial services companies, for example, are focused on loan and lease receivables, FASB says. The changes are meant to “provide a more flexible mechanism to accommodate various reporting presentations,” FASB says.
With the 2016 update, FASB also is looking for feedback on how users prefer to find taxonomy update information -- either as a label similar to a change label or as a note in the reference relationships alongside the references to the Accounting Standards Codification.
FASB is accepting comments on the proposed update through Oct. 31. The board will host a webinar on Sept. 22 to explain the planned changes. After feedback and revisions by FASB, the taxonomy will go to the SEC for its approval, which FASB says is expected in early 2016. That will enable companies to use it to complete their 2016 XBRL filings.