Bob Schneider is a Partner in 
Wilson So is the Director of Hitachi Consulting Corporation EBRC Proposes New XBRL Taxonomy for the MD&A
Written by Bob Laux Posted on April 15, 2009
Bob Laux is the Senior Director of Financial Accounting and Reporting at Microsoft Corporation. He is responsible for Microsoft’s technical accounting, including interacting with and responding to accounting standard setters on numerous issues. Prior to joining Microsoft in 2000, Mr. Laux was an Industry Fellow at the Financial Accounting Standards Board (FASB) where he was responsible for coordinating the activities of the Emerging Issues Task Force.
As indicated in previous posts on this blog, the SEC’s rule for interactive data is a major milestone in XBRL implementation. However, it is important that there are continued improvements in XBRL taxonomies, especially with respect to disclosures outside the financial statements and footnotes.
The SEC rule made specific reference to disclosures outside the financial statements and footnotes:
We did not propose, and are not adopting, a requirement that filers provide interactive data for their Management’s Discussion and Analysis (MD&A), executive compensation, or other financial, statistical or narrative disclosure . . . In deciding not to require the tagging of this information at this time, we agree with the commenters who believed that more experience with interactive data and a greater understanding of the costs and time associated with compliance with the requirements as proposed is needed before expanding the requirement to other information. We will continue to consider, however, the advisability of permissible optional or required interactive data for disclosures made outside a set of financial statements prepared in accordance with U.S. GAAP or IFRS as issued by the IASB or related financial statement schedules required under Commission rules (33-9002, pages 40-41).
The Enhanced Business Reporting Consortium (EBRC) is currently in the process of improving the taxonomy for Management’s Discussion and Analysis (MD&A). As a follow on to the American Institute of Certified Public Accountants (AICPA) Special Committee on Enhanced Business Reporting, the EBRC was formed by four founding members: PricewaterhouseCoopers, Microsoft, Grant Thornton, and the AICPA. The mission of the EBRC is to establish a consortium of investors, creditors, regulators, management, and other stakeholders to improve the quality, integrity, and transparency of information used for decision-making. In particular, the EBRC is working on enhancing the reporting model to focus not only on financial information, but also on a range of contextual and nonfinancial information that provides an enriched understanding of company performance, value drivers, strategies, and potential.
The current MD&A taxonomy consists of approximately 70 tags with most of the elements at the same hierarchical level. This required the creation of numerous company-specific extensions to make the taxonomy useful for those companies that tagged their MD&A under the SEC’s Voluntary Filing Program. While the new taxonomy being proposed by the EBRC currently only consists of approximately 140 tags, it has a structure that should significantly simplify the tagging of the information as well as facilitate access for users of this information.
It is hoped that the financial reporting supply chain will openly collaborate on the proposed taxonomy in order to create more detailed tags so that narrative information can be provided in an interactive data format. Although the SEC is not requiring the tagging of narrative information at this time, the ability to tag and consume nonfinancial information (i.e., the narrative type of disclosures that are made via MD&A and other channels of corporate communication) is increasingly useful to both companies and consumers of business information, and is vital to providing enhanced transparency in the markets.
The EBRC invites interested parties to review the proposed MD&A taxonomy at this website. Follow the instructions for logging in and the MD&A taxonomy will be midway down the navigation tree once you are logged in.