The Securities and Alternate Fee issued an advisory Friday about how filers are utilizing the mistaken XBRL tags for reporting their finance lease legal responsibility and future funds.
Employees members within the SEC’s Division of Financial and Threat Evaluation have observed that some firms usually are not appropriately tagging disclosures about their finance lease legal responsibility, undiscounted future lease funds, and the surplus quantity of the undiscounted future lease funds over the finance lease legal responsibility, particularly the imputed curiosity.
The SEC mentioned that filers who’re tagging these disclosures ought to use the next parts from the U.S. GAAP Monetary Reporting Taxonomy, respectively:
- FinanceLeaseLiability;
- FinanceLeaseLiabilityPaymentsDue; and,
- FinanceLeaseLiabilityUndiscountedExcessAmount.
Public firms have been adjusting to the brand new lease accounting commonplace that the Monetary Accounting Requirements Board started requiring them to make use of in 2019. The usual was delayed for personal firms till this 12 months, however they don’t want to fret about submitting their monetary statements with the SEC. The SEC has been mandating for years that public firms ought to use XBRL (Extensible Enterprise Reporting Language) for submitting their financials by means of its EDGAR on-line system. The information-tagging expertise allows monetary analysts and traders to check efficiency and developments throughout firms and sectors. FASB maintains the XBRL taxonomy for U.S. GAAP and adjusts it annually for brand spanking new accounting requirements. Nonetheless, it might take a while for firms to regulate to the modifications.
The Securities and Alternate Fee headquarters in Washington, D.C.
Joshua Roberts/Bloomberg
“Probably the most generally noticed tagging errors embrace the inappropriate use of customized tags to tag the surplus quantity of the undiscounted future lease funds over the finance lease legal responsibility, incorrect use of adverse values to tag the surplus quantity as an offset to the undiscounted future lease funds, and use of incorrect tags associated to capital leases below the FASB Accounting Requirements Codification 840 – Leases, which has been outdated by ASC 842 – Leases,” mentioned the SEC.
The SEC is attempting to discourage firms from counting on tags that they’ve personalized for their very own functions as a result of it limits comparability.
“Whereas customized tags accommodate distinctive circumstances in a filer’s specific disclosure, the fee has acknowledged that using customized tags may doubtlessly cut back the power of customers to check related data throughout firms,” mentioned the SEC. “Thus, the fee’s guidelines specify that ‘an digital filer should create and use a brand new particular component if and provided that an acceptable tag doesn’t exist in the usual listing of tags for causes apart from or along with an inappropriate commonplace label.’”
Unfavorable values can be an issue in XBRL, in keeping with the commision. “Concerning adverse values, most XBRL numeric parts are designed to be entered as optimistic values even when, in presentation, they’re typically offsets to different values,” the advisory defined. “For instance, accrued depreciation, depletion, and amortization for property plant and tools needs to be entered as optimistic values. For extra data on adverse values, see Sections 6.6.30 and 6.11.6 of the EDGAR Filer Guide (Quantity II).”
The SEC identified that deciding on present and related parts from the U.S. GAAP Monetary Reporting Taxonomy to tag disclosures permits for more practical entry to and evaluation of the disclosures by traders, different market contributors and different customers of the information: “As a part of the choice course of, filers ought to fastidiously assessment the accounting requirements disclosure necessities and the U.S. GAAP Monetary Reporting Taxonomy earlier than mapping their disclosures to the taxonomy parts.”
For extra data, see FASB’s U.S. GAAP Monetary Reporting taxonomy and the SEC employees observations and steerage on knowledge high quality.