The Securities and Exchange Commission has given its final approval to the 2015 GAAP Financial Reporting Taxonomy, clearing the way for companies to rely on it as the earliest 2015 filers approach their financial statement filing dates.
FASB revises the GAAP Taxonomy annually to update it for new accounting standards and to try to make it more useful and easier to navigate. The SEC must approve the Taxonomy, however, before companies are allowed to rely on it to submit their financial statements via XBRL.
The Taxonomy is a collection of computer-readable tags in the XBRL format that allow companies to tag each piece of financial data in their financial statements and footnote disclosures. The tags enable computers to search, assemble, and process data automatically, in theory making it more accessible and easier to analyze for investors and other users of financial statement data. In practice, however, users have been slow to adopt the technology because it is prone to contain errors and considered less reliable than the audited financial statements that companies submit to the SEC.
According to FASB, the 2015 Taxonomy contains far fewer changes than in prior years. Nearly 130 elements were dropped from the 2014 to the 2015 Taxonomy, but new ones were added to reflect new accounting standards in equity method investments, trouble debt restructurings, service concession arrangements, technical corrections and improvements, discontinued operations, development stage entities, repurchase-to-maturity transactions, stock compensation, and consolidation.
The Taxonomy does not reflect standards adopted by FASB that affect only private companies, nor does it include elements for the new standard on revenue recognition, which isn’t due to take effect until 2017.
The SEC still has not approved a Taxonomy for companies that file their financial statements under International Financial Reporting Standards, effectively exempting them from the XBRL filing requirement that has been in effect for GAAP filers for several years.