The IFRS Foundation has successfully concluded the
pilot initiative that it launched in April to work with US-listed foreign companies to produce IFRS financial reports in XBRL (eXtensible Business Reporting Language) that are compliant with US SEC (United States Securities and Exchange Commission) requirements.
The aim of the initiative was to:
- support preparers who use the IFRS Taxonomy in meeting the
ruling issued by the US SEC on 17 December 2008 which requires all US-listed foreign private issuers to submit their IFRS financial reports, including their periodic reports, in Interactive Data format, and specifically in XBRL, from 15 June 2011.
- engage with preparers using the IFRS Taxonomy and obtain feedback on the usability of the taxonomy.
The IFRS Foundation worked with 12 companies who volunteered to participate in the initiative. Participants used the
IFRS Taxonomy to produce 20-F filings in XBRL format that could be accepted by the US SEC EDGAR filing system. ‘Level 1’ XBRL tagging was applied to the filings, ie all items in the primary financial statements were tagged while notes were tagged using a single text block.
After spending time deepening their knowledge of XBRL, participants undertook the filing process by:
- mapping and matching financial line items to IFRS Taxonomy items;
- creating XBRL files (in co-operation with participants’ selected service provider);
- checking and validating the XBRL files; and
- rendering the XBRL files.
All participants successfully completed the mapping stage, and the majority of participants also created XBRL filings. Feedback from participants indicated that, depending on each participant’s level of XBRL knowledge, between 6 and 60 hours was required to complete the first stage, which was mapping of financial statement line items to IFRS Taxonomy items. They then took an average of 10 hours to create the XBRL files, and an average of 10 hours to validate the XBRL files.
The feedback from participants in this pilot project has revealed several other important findings:
‘standard approach’ used by the IFRS Foundation to develop the IFRS Taxonomy accurately represents concepts for explicit IFRS disclosures.
- In many cases, different participants created concepts that had the same meaning but were technically different.
- Many participants found that they needed to create additional taxonomy items (ie IFRS Taxonomy extensions) to reflect common-practice concepts for their 20-F filings. The need for these extensions arose largely from IFRS requirements and the flexibility that IFRS allows for presentation and aggregation. This will need to be addressed.
- Most participants found that working with the IFRS Taxonomy gave them a greater understanding of how to prepare 20-F filings.
The IFRS Foundation XBRL Team has decided on a number of further actions that will be taken as a result of the findings from the initiative:
- Minor amendments will be made to the way in which some IFRS disclosures are represented in the IFRS Taxonomy.
- Analysis will be undertaken of concepts that are not in the IFRS Taxonomy but that are commonly reported by commercial and industrial companies.
- Field tests will be initiated with:
- financial institutions and insurers to assess how financial statements from these two sectors can be created using the IFRS Taxonomy, and
- companies, to assess how level 2, 3 and 4 tagging (ie detailed note tagging) can be applied using the IFRS Taxonomy. A call for interest for participants will be issued in Q1 2011.