The Securities and Exchange Commission has taken a small new step to help improve the accuracy of XBRL filings, but it’s still not clear when or how the commission might move forward with bigger measures that XBRL advocates are hoping to see.
The SEC staff recently updated its ongoing “Frequently Asked Questions” document on interactive data disclosures to address when calculation relationship are required in XBRL filings. Calculation relationships provide key information to show relationships among elements and their corresponding numeric facts. They enhance the quality of data by providing context to help interpret custom extensions and reduce the number of incorrect amounts that appear in XBRL renderings.
The FAQs point out that the EDGAR Filer Manual includes a specific requirement for calculation relationships with five specific conditions for when they must be provided. The conditions involve the appearance of items in the HTML or ASCII filing and the presence or absence of the item with at least one other item and the net or total of those items. If the line item has a corresponding fact in the XBRL instance document, and if it appears with at least one fact other than a net or total figure, it might be subject to the calculation relationship requirement, the FAQs explain.
In a recent webinar, Mike Willis, an assistant director at the SEC with responsibility for XBRL, said the staff issued the new guidance in the FAQs in response to questions that have followed the SEC’s issuance of a “Dear CFO” letter in mid-2014. That letter directed public companies to include calculation relationships for certain contributing line item elements for financial statements and footnotes. “Through our selective review, we have noticed that your filing does not include all required calculation relationships,” the SEC wrote.
“Stay tuned for more in that area,” said Willis during the webinar. The staff continues to reach out to companies and vendors whose reports contain errors or omissions, he said. “The outreach may be via phone call, and it’s a lot more frequent than some of our listeners may imagine.”
Willis said companies are well aware of the SEC’s historic concerns around XBRL data quality stemming from negative values, inappropriate use of extensions, and other issues that “unfortunately we still see today in company reports. Stay tuned for more observations on those topics.”
Asked if he could provide status updates on the SEC’s consideration of in-line XBRL or an assurance requirement for XBRL filings, Willis said he could not. The staff continues to work on in-line XBRL, where companies would integrate their traditional and XBRL filings by embedding tags in a traditional HTML document, Willis said. “We believe it will help improve the quality of the structured disclosures, ease filer burden, and facilitate staff reviews,” he said. But he could not say if or when the SEC would consider transitioning to an in-line XBRL method.
As for any possible requirement to have the XBRL rendering audited, Willis said he had no comment. “It’s a great question, and one I am not able to address at this time,” he said.
None of that suggests the SEC is losing interest in XBRL, however, said Willis. He pointed to a recent speech by Andrew Ceresney, director of enforcement for the SEC, as evidence of the SEC’s interest in XBRL. The SEC’s Corporate Issuer Risk Assessment program, or CIRA, helps enforcement staff “detect anomalous patterns in financial statements that may warrant additional inquiry,” said Ceresney.
CIRA is the next generation of the “Accounting Quality Model” developed by the SEC’s Division of Economic and Risk Analysis, and it leverages data generated by XBRL filings, said Willis during the webinar. “Because this is a homegrown tool, we can customize the tool as needed, setting and refining different break points, drilling down on particular corporate events,” Ceresney said.