Deloitte letter to SEC on interactive data proposal

  • XBRL (eXtensible Business Reporting Language) (mid blue) Image

12 Aug 2008

On 14 May 2008, the US Securities and Exchange Commission proposed that all registrants be required to file their data with the SEC in XBRL (interactive data) format.

XBRL reporting would be required for registrants using either US GAAP or IFRSs. The transition would take three years starting in 2008. There's more information in our News Story of 16 May 2008. A few days later, the Commission proposed that more than 8,000 mutual funds trading in the US would also be required to file XBRL date (see our News Story of 26 May 2008). Deloitte & Touche LLP (United States) has submitted a comment letter on the SEC's first proposal. Overall, we support the Commission's interactive data initiative. Our letter makes a number of suggestions that, we believe, will ensure successful implementation of the proposed rule.

Among the points made in our letter:

  • Updated preparer guidance. The Commission should update the EDGAR Filer Manual to provide additional guidance on tagging information in the footnotes and financial statements, and this update should be exposed for public comment sufficiently in advance of the proposed adoption dates.
  • Maintenance, support, and updating of taxonomies. The Commission should expose for comment its plan for ensuring that the XBRL taxonomies remain current as well as its planned mechanism for communicating such updates to preparers and interactive data users.
  • Validation software considerations. The Commission plans 'to use validation software to check interactive data for compliance with many of the applicable technical requirements'. The Commission should release its validation criteria for public comment sufficiently in advance of the first phase-in dates under the rule to enable preparers and users to understand the extent of the procedures performed by the software and the expectations of the Commission.
  • Monitoring during the phase-in period. The Commission should specify (1) the criteria that it will use during the early phase-in periods to assess the success of the implementation and (2) how it will determine whether additional adjustments will be necessary for the later phase-in periods.
  • Assurance issues during the phase-in period. The PCAOB and the Commission should work with the auditing profession to revise the standard report of the independent registered public accountant to explicitly refer to the financial statements filed in Item 8 of the registrant's Form 10-K and perhaps to include a statement that assurance has not been provided on the interactive data. The Commission also should develop specific guidance on how the auditor should report if a registrant voluntarily elects to obtain assurance on its interactive data.
  • Clarifying the extent of auditor liability. Our letter offers a number of suggestions for clarifying auditor liability with respect to interactive data.
  • Early adoption of the proposal. The Commission should clarify how a registrant in one of the later phase-in groups could early-adopt the proposal.
  • Interactive data and financial statement requirements. The proposed rule currently would apply only to registration statements, annual reports on Forms 10-K or 20-F, quarterly reports on Form 10-Q, and transition reports. The Commission should clarify whether a registrant should file interactive data for Forms 8-K that update financial statements.
  • Need for assurance after the phase-in period. Throughout the phase-in period, the Commission should seek feedback from financial statement users regarding (1) whether their primary source of information for investing decisions is financial statements filed in the traditional format or as interactive data and (2) whether they believe assurance is needed for the interactive data.
  • Coordination with IFRS initiatives. The Commission has issued a concept release on allowing US issuers to prepare financial statements in accordance with International Financial Reporting Standards. The Commission should ensure that any rulemaking associated with that concept release remains aligned with its XBRL rulemaking efforts.


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