Staff at the Securities and Exchange Commission are advising companies to take a careful look at their use of axis tags in their XBRL filings. With more than 300 provided in the U.S. GAAP Taxonomy and most companies using about 20 of them, there should be little reason to create custom tags, the staff says.
“In general, the need to create a custom axis tag -- one that is not in the standard taxonomy -- should be infrequent,” the staff advised in a recent report. “When companies create a custom axis tag when an appropriate standard axis tag already exists within the U.S. GAAP Taxonomy, data quality is diminished and comparability among and between reporting companies is unnecessarily impaired.”
The SEC’s Division of Economic and Risk Analysis has been studying corporate filings from 2013 to 2015 in the “eXtensible Business Reporting Language” or XBRL format looking for problems that lead to data quality concerns. The creation of custom axis tags is one such concern. An axis tag is an element in the Taxonomy that enables a filer to divide reported elements into different dimensions, such as showing revenue by geographic area or fair value measurements by level.
While earlier staff observations have shown large filers make less use of custom line item tags, which the staff has earlier dissuaded in prior alerts, large filers made greater use of custom axis tags in the latest analysis. Custom tagging of line items has declined, the staff reported, but about half of all filers use at least one or more custom axis tags, and the numbers climbed across all sizes of reporting entities from 2013 to 2015. Smaller companies use them less, the SEC staff says, perhaps because their financial disclosures are less complex, so more readily structured using tags provided in the Taxonomy.
The staff observations also raise concerns about how third-party providers are approaching tagging. The staff noted that two of the 29 third-party providers identified in XBRL exhibits had custom axis tag rates of 21 percent and 31 percent compared to the mean rate of 5.9 percent across the group. “Companies who rely on a third-party provider to create their XBRL exhibits are still responsible for their exhibits’ accuracy and compliance with the filing requirements,” the staff points out in a footnote to the report.
The report concludes with an advisory that the staff hopes companies will use the document to better use the latest GAAP Taxonomy and reduce the use of custom axis tags. “Staff intends to continue monitoring the use of custom axis tags as new exhibits are submitted,” the report says. “Depending on the results of this effort, commission staff may issue further guidance or pursue other action.”
The SEC has approved the 2016 GAAP Taxonomy for companies to use in filing their 2016 financial statements. The Financial Accounting Standards Board, which is responsible for maintaining and updating the Taxonomy, is hosting a webcast on April 5 to help explain the new Taxonomy and provide updates from SEC staff on filing issues.
To further assist companies in improving their XBRL renderings, FASB staff have also issued several final implementation guides to accompany the 2016 taxonomy release. The guides address areas such as disposal groups and discontinued operations, insurance, liquidation basis of accounting, defined benefit plan measurement dates, segment reporting, disclosures regarding offsetting assets and liabilities, other comprehensive income, notional amount disclosures, repurchase financings, and subsequent events.