The U.S. Securities and Exchange Commission’s latest “Letter to Industry” - aka "Dear CFO Letter" - provides a not-so-gentle reminder that issuers must include required “calculation relationships” pertaining to eXtensible Business Reporting Language (XBRL) provided in their Form 10-Q quarterly reports.
‘Dear CFO’ letters or ‘Letters to Industry’ are issued by the staff from time to time when the SEC’s Division of Corporation Finance (as part of its filing review), Office of the Chief Accountant or (in this case) the Office of Interactive Disclosure. The letters are issued when the SEC becomes aware of a particular matter of concern in SEC filings that is either industry wide, or throughout all public company filers, an the staff believes reporting is not in compliance with existing rules and regulations.
In the current matter, the SEC posted a “Dear CFO” letter on July 7, 2014 entitled “Sample Letter Sent to Public Companies Regarding XBRL Requirement to Include Calculation Relationships.”
Here are some key points, based on the SEC’s letter. These points are not verbatim from the letter; refer to the letter linked above for the SEC’s exact language.
- The SEC has found flaws in numerous companies compliance with required reporting of calculation relationships relating to XBRL reporting requirements in its review of certain Form 10-Qs.
- Acceptance of company filings by EDGAR does not mean that the filing is complete or in compliance with the Commission’s requirements.
- The SEC asks that filers, in preparing the required exhibit with XBRL data, take the necessary steps to ensure that the filer is including all required calculation relationships.
- Information about the XBRL calculation relationship requirement can be found in the EDGAR Filer Manual. Refer to the most recent update of the manual, updated as of June, 2014, Chapter 6, specifically Sections 6.14 and 6.15.
- Additional information is available on the SEC web site at http://xbrl.sec.gov/, and filers with questions about their structured data filing requirements may call the SEC’s Ask OID Help Desk at (202) 551-5494.
Also on July 7, the SEC published a report relating to issuer’s XBRL reporting, entitled, SEC Staff Observations of Custom Tag Rates.
The SEC previously approved the U.S. GAAP 2014 Standard Taxonomy for XBRL in June, as part of the process of adopting an updated EDGAR Filer Manual. The U.S. GAAP Standard Taxonomy is developed by and released for public comment by an XBRL team at the Financial Accounting Standards Board.
Financial Executive International’s Committee on Information Finance and Technology and Committee on Corporate Reporting follow XBRL reporting requirements, and FEI’s Research affiliate, the Financial Executives Research Foundation, has published a number of reports relating to XBRL recently. Visit www.ferf.org•