The 2017 U.S. GAAP Financial Reporting Taxonomy as proposed by the Financial Accounting Standards Board contains some changes that are meant to address concerns raised by users of XBRL-tagged financial statement data.
FASB is looking for feedback on its annual GAAP Taxonomy update, which is now open for public review, to assure the changes it has introduced will do what FASB intends. The board updates the GAAP Taxonomy each year to reflect changes in accounting standards, but also to continue to work out kinks and to make it easier to use. The ongoing objective is to continue to improve the quality of financial data filed through XBRL by eliminating complexities, redundancies, or inconsistencies to the extent possible to promote more consistent application of the Taxonomy to XBRL filings.
Changes from the 2016 to the 2017 GAAP Taxonomy fall into a handful of major areas, FASB says, in its release notes accompanying the proposed Taxonomy. First are changes in the accounting rules, including updates to the new revenue recognition standard, as well as new standards around financial instruments, leasing, liabilities, loan losses, derivatives and hedging, investments, stock compensation, and cash flow classification.
New in 2017, FASB made a number of design changes meant to address concerns raised by consumers of XBRL-tagged financial statement data, most notably difficulties in interpreting data where dimensions are used for purposes other than that describes in the dimension uses style guide that accompanies the Taxonomy. That prompted FASB to make changes aimed at improving information without relying on dimensions when they are not the optimum structure for consuming the data.
Another batch of changes arises due to FASB’s special focus on retirement benefits, where FASB is looking for ways to reduce inconsistencies and redundancies. The board plans to roll out changes in this area in phases, with the first phase not involving elements related to plan assets but instead focused on element consistency and improved the modeling. The first phase has produced 67 new elements, more than 300 label changes and, nearly 120 reference changes. At the same time, FASB eliminated nearly 100 elements.
FASB also introduced changes to the 2017 Taxonomy based on recommendations from resource groups focused on insurance and financial services sectors. Those changes are focused on removing redundancies and inconsistencies, and updating elements around areas like deferred acquisition costs, present value of future insurance contracts, deferred sales inducements, and Basel III disclosures.
After FASB receives feedback on its proposed updates, the board will make any final changes and then hand it over to the Securities and Exchange Commission for its approval, which is required before companies can rely on it to comply with their XBRL filing requirement. The SEC staff issued a statement encouraging filers, investors, analysts, software service providers and anyone else with an interest to participate in the public review as a way “to continue to improve the process for creating and using XBRL structured financial statements.”