With no approved taxonomy for IFRS, the Securities and Exchange Commission may be giving IFRS filers in the United States some additional time to complete their first XBRL submissions.
The SEC has published a “no action letter” saying it will not take action against foreign private issuers who do not submit their financial statements in XBRL in 2011 because the SEC has yet to adopt an IFRS taxonomy. FPIs are due to complete their first XBRL submissions with their first filing after June 15, 2011. For most FPIs, that means their first year-end financial statements, since IFRS filers often do not produce quarterly reports.
The IFRS Foundation, which is in charge of developing the IFRS taxonomy, finalized a 2011 taxonomy in late March, but the SEC has not yet approved the taxonomy for use in completing SEC-compliant XBRL submissions. The SEC apparently is concerned the taxonomy isn’t detailed enough – meaning it doesn’t provide enough tags – to suit its needs. The IFRS Foundation says it is working on developing some supplementary tags that would reflect disclosures that are commonly reported by IFRS filers.
With the largest GAAP filers now entering their third year of XBRL submissions, the SEC has made some noise about tagging and extensions. In the earliest wave of GAAP XBRL filings, the SEC waded through quite a few more extensions than it expected. The SEC tasked the Financial Accounting Standards Board with producing more tags in the GAAP taxonomy, and it instructed companies to make better use of the tags that were available. The idea was to get more data into the detailed tags to keep the data inside the XBRL guardrails, rather than allowing so much information to seep into incomparable customized extensions.
So learning from that experience, the SEC is applying some pressure to the IFRS Foundation to make sure the earliest XBRL submissions for IFRS filers don’t follow the same pattern. Apparently, the SEC is willing to wait for a more detailed taxonomy rather than force the first round of XBRL submissions in IFRS and face another sea of extensions.
The no action letter is a bit toothless, though, because it doesn’t really say anything FPIs don’t already know. The letter doesn’t say the SEC is excusing companies from the XBRL requirement; it only says they won’t be expected to submit in XBRL until the SEC approves a taxonomy. FPIs already know they can’t make XBRL submissions without an SEC-approved taxonomy. And they know the SEC can’t really club them for not complying with the rules if it hasn’t given them the tools they need to comply.
So the waiting begins for FPI filers. Wait for a taxonomy, and wait for the SEC to approve it or to defer the effective date for XBRL submissions.