After much anticipation, the SEC announced that it is moving its voluntary filing program related to Inline XBRL to a mandatory one. Operating companies and mutual funds will be required to file Inline XBRL instead of the traditionally-separate XBRL and HTML documents. There is a phase-in schedule for both operating companies and mutual funds to promote a smooth transition to the new format, consistent with the initial XBRL voluntary filing program that started in 2009. The adoption of Inline XBRL has many advantages for investors, regulators and filers.
The traditional format for XBRL and HTML submissions to the SEC is comprised of 6 XBRL files (one instance document, five extension taxonomy files) and then separate HTML and supplemental files such as JPEG files for graphics. With Inline XBRL, the XBRL instance document will no longer be submitted to the SEC since the XBRL tagged data is included as part of the HTML file. This allows both XBRL creators (companies) and consumers (investors) to review the HTML and XBRL simultaneously. The traditional format is very cumbersome for reviewers because the HTML and XBRL had to be reviewed separately and compared for consistency. With Inline XBRL, consistency is inherent in the HTML document’s structure.
The phase-in schedule mandating Inline XBRL for operating companies is as follows:
- Large Accelerated Filers using U.S. GAAP will be required to file with fiscal periods on or after June 15, 2019
- Accelerated Filers using U.S. GAAP will be required to file with fiscal periods on or after June 15, 2020
- All other filers using U.S. GAAP will be required to file with fiscal periods on or after June 15, 2021
The requirement applies to the first Form 10-Q filed for a fiscal period beginning on or after the applicable start date. For instance, a Large Accelerated Filer using U.S. GAAP filing a 10-Q with a quarter end date of June 30, 2019 would be required to file in Inline XBRL. Alternatively, if the quarter end date of the same registrant was June 10, 2019 it would be not required to file in Inline XBRL until their next quarterly submission.
The phase-in schedule mandating Inline XBRL for mutual fund companies is similar in concept but different from operating companies, as follows:
- Mutual funds with net asset size over $1 billion will be required to file two years from the effective date of the amendments
- All other mutual funds will be required to file three years from the effective date of the amendments
In addition to mandating Inline XBRL, the Final Rule removes two previous XBRL-related requirements. First, companies will no longer have to host XBRL files on their website. Most investors are accessing the data through other tools such as Certent DisclosureNet, the SEC’s EDGAR site, or other third-party service providers. Second, mutual fund companies will no longer have the 15-business day grace period to submit XBRL after their HTML filing. Instead, mutual fund companies will be required to file XBRL and HTML simultaneously which is consistent with how operating companies have been filing their XBRL. The reason for this change is to allow more timely access to the data.
The formal adoption of Inline XBRL by the SEC should not come as a surprise to filers, software vendors, investors or any industry stakeholders given the voluntary filing program for Inline XBRL has been around since June 2016 and given the many benefits of Inline XBRL. With the HTML and XBRL intertwined, investors, analysts, filers and other users will be able to scrutinize and analyze data more quickly which will lead to increased quality data. The quality of the data is extremely important as investors are counting on the data to be accurate, so they can make sound investment decisions.
Certent is at the forefront of regulatory compliance, supporting XBRL mandates across the globe. To learn more about how Certent can help you meet the SEC’s Inline XBRL requirements, contact our team today.