Posted on Tuesday, April 28, 2020

XBRL US responded to the SEC proposal on Management’s Discussion and Analysis, Selected Financial Data, and Supplementary Financial Information. The SEC proposes various reforms to the MD&A and other text-based information in corporate filings, including adding one new section, and eliminating certain sections deemed to be redundant because the reported facts are already available in XBRL format elsewhere in the filing.

The proposal notes that because of XBRL tagging, these duplicative sections can be eliminated, reducing filer workload. This sentiment is reiterated in a comment letter from a public company responding to the proposal which states “We agree with the SEC’s proposal to eliminate Item 301, as the historical data is easily retrievable, at minimal cost, from EDGAR, from registrants’ own websites, from third-party websites and via XBRL software.”

While the proposal does not recommend that the MD&A be formatted in XBRL, the Commission poses a question about whether XBRL should be required. Our letter recommends that clearly defined portions of the MD&A be XBRL-tagged, noting:

Given the importance of the MD&A, we recommend that the Commission revise the current proposal to require companies to first, organize the data so that each section is easily identifiable, and second, to require XBRL block tagging of these topic areas to make it easier for users to consume it. The cost and effort involved would be minimal for issuers because they already have the tools and the processes to prepare XBRL-formatted data. The benefit to investors, companies conducting peer analysis, and other data users, however, would be significant, outweighing the additional effort.. Block tagging could also be applied to other kinds of data, like Environmental Social Governance (ESG) information that is becoming of greater interest to investors. Companies are more likely to include climate-related risks and sustainability measures in the MD&A or in the Risk Factors section of filings.

Read the SEC proposal.

Read the XBRL US letter:XBRL US Comment on SEC Proposal RE Management Discussion and Analysis File Number S7-01-20