Why XBRL is required?

The Securities and Exchange Commission (SEC) is an independent government agency responsible for regulating the securities industry in the United States. In this capacity, it pursues a three-part mission: to protect investors, to maintain the fairness and safety of securities markets, and to facilitate capital formation. As mandated by the Commission, all public companies are required to file financials and other reports in XBRL format: companies with worldwide public float greater than $5 billion to comply starting with the period ending June 2009; all other large accelerated filers to comply starting with the period ending June 2010; all other public companies comply with the period ending June 2011.

In June 2016, the SEC announced that U.S listed companies can voluntarily file their Quarterly and Annual Reports in Inline XBRL (iXBRL). In June 2018, it was announced that companies would have to officially adopt the iXBRL reporting standard in a phase wise manner. U.S. GAAP filers have a three-year phase-in to comply with the Inline XBRL requirements as follows, beginning with fiscal periods ending on or after: June 15, 2019 for large accelerated filers, June 15, 2020 for accelerated filers and June 15, 2021 for all other filers. IFRS filers will be required to comply with Inline XBRL beginning with fiscal periods ending on or after June 15, 2021.

Beneficiaries of XBRL data:

Regulators:

  • Greater transparency through ease of analysis of the regulated entities filings
  • Increase data accuracy
  • Dramatically reduced the time to process filings from weeks to days
  • Rise in analyst productivity
  • Validate and review data much more efficiently and usefully than they have hitherto been able to do.

Corporate Community:

  • Cost savings in preparation, report creation, analysis. High flexibility through the use of dashboard based business rules. This leads to significant savings in man hours and lead time in compliance and consolidation
  • Faster availability of data into standard reports
  • Extracts data from accounting packages and makes it standardized and portable
  • Provides a common framework of definitions
  • Easy data handling due to standardization and automation, centralization of delivery
  • A pioneering status among enterprises in the use of XBRL. Image enhancement in the marketplace through Increase of quality and consistency of data

Auditors:

  • Automate financial statements handling, cutting out time-consuming and costly collation and re-entry of information.
  • Accurate and Quality Data
  • Facilitates audit trail

Equity Analyst/Investment Banker/Credit Analyst/Investors:

  • Easier access to financial data
  • Easier analysis and comparison of financial data
  • Utilizing a publicly available XBRL database of Risk Return filings or prospectuses, could easily, in a matter of minutes, identify funds for review based upon fund type, return history and expense information
  • Simplify the selection and comparison of data, and deepen their company analysis
  • Time required for analysis, validation and arranging financial information according to the needs is greatly reduced.

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