Tag selection season is officially open, now that the Securities and Exchange Commission has given its final blessing to the 2011 GAAP Taxonomy.
For preparers that dug into the 2011 Taxonomy when it was released by the Financial Accounting Foundation to the SEC, it might be comforting to know that the SEC approved the FAF update of the taxonomy without making any changes. So if you’ve invested some time and effort into studying the new taxonomy to update tag selections or transition some of your unique extensions into tags, your time and effort were well spent.
If you chose to wait for SEC approval before investing that time and effort, there’s no more reason to put it off. It may be a tedious process to study the entire taxonomy looking for places where your tag selections could be improved, but it’s important to make the filing process as consistent and as comparable as possible across all companies. That starts with making sure all the elements of your financial statements are properly tagged.
The FAF is responsible for updating the taxonomy annually to reflect changes in accounting rules. But the update also is important to fix any holes or problems that might be discovered as companies continue using it to submit their financial statements in XBRL. XBRL US developed the 2009 taxonomy, but as the SEC began mandating XBRL adoption, it shifted responsibility for updating the taxonomy to the FAF in order to link it more closely to current accounting rules.
That shift occurred in 2010, so there was no taxonomy update that year. As such, the 2011 taxonomy represents two years worth of changes in accounting rules. Those two years of XBRL use has exposed many tag problems to be fixed. The SEC published a 14-page summary of the changes to help preparers more easily spot where there are differences. The FASB published a more extensive summary.
The SEC wants companies to use the new taxonomy to bring more consistency to the selection of tags and reduce the number of extensions. But oddly enough, the SEC is not explicitly requiring companies to use the 2011 taxonomy for their 2011 XBRL submissions.
No doubt, that’s a concession on the SEC’s part, that it hasn’t provided a lot of lead time for companies to use the taxonomy. That’s true for companies that have been at this for a year or two that need to update their tag selections. But it’s even truer for the thousands of smaller companies that are filing in XBRL for the first time this year, and therefore are just learning to navigate the taxonomy.
With the 2011 GAAP taxonomy approval, the SEC said it has updated the EDGAR validation and Previewer to incorporate the new taxonomies. It also has updated the Interactive Data Test Suite used by software developers.