June, 2021 Newsletter

June, 2021

SEC announced tools and programs to support issuers, XBRL application providers, and data users. On June 22, the Commission announced its intent to conduct a test pilot program to support the planned roll-out of the final rule Securities Offering Reform for Closed-End Investment Companies. This is an important development that will help issuers and vendors get a headstart on testing out submissions to be made in structured (XML) format. The XBRL US Regulatory Modernization Working Group has requested pilot programs such as this one for some time. We are pleased with the Commission’s actions, and hope this is just the beginning of pilots for all new structured programs going forward.

Separately, the Commission announced that the Financial Accounting Standards Board (FASB) has published an implementation guide for Financing Receivable and Current Expected Credit Loss (CECL) Disclosures, and a proposed Taxonomy Implementation NOTE (TIN) Guide. The public comment period for both guides will end on July 26, 2021.

The SEC also announced the introduction of an EDGAR Structured Disclosure API which is now available for Beta Testing. The API includes entity information and submission history, as well as XBRL data from financial statements in JSON format.

The European Commission (EC) published a Consultation Paper on EFRAG sustainability reporting standard setting. The paper, EFRAG Due Process Procedures on EU Sustainability Reporting Standard-Setting, outlines requirements that will be followed in the European Financial Reporting Advisory Group’s (EFRAG) role as technical advisor to the EC in preparation for Sustainability Reporting Standards. EFRAG has been tasked with developing the draft standards to support the EU’s proposed Corporate Sustainability Reporting Directive (CSRD). As noted in the consultation paper, “Further to the proposal for a CSRD, companies will have to ‘tag’ their reported sustainability information according to a digital categorisation system to be developed together with the sustainability reporting standards.“

The timeline for completion of draft standards has been set for October 2022. Comments to the consultation paper are due September 15, 2021.

XBRL US commented on the SEC’s request for input on Climate Change Disclosures. Several key recommendations were made in the XBRL US letter: 1) the SEC should play a role in setting ESG standards to ensure they fit the requirements of U.S. listed companies, and because global standard setting will lower overall compliance costs and reporting burden for all entities; 2) the SEC should encourage the use of existing ESG standards given the expertise already available in the market; 3) climate-related disclosures should be made available in machine-readable (XBRL) format; 4) the Commission should establish a voluntary submission program to help the market gain experience, and refine the process of a future implementation; 5) while a single global standard meeting the needs of all reporting entities is likely not feasible, we encourage establishing a baseline set of standards for all companies, with industry- and jurisdiction-specific requirements set separately; and 6) the Legal Entity Identifier (LEI) should be leveraged in the ESG reporting process, given the highly supply-chain dependent nature of climate-related data.

An updated version of our free Excel add-in is available in Microsoft’s AppSource store. The latest release of XBRL Filed Data gives users faster and better control over data returned by queries created in the taskpane for as-filed SEC data. Plus, we’ve added new output options, more endpoints for taskpane queries and optimized field layout and defaults.

SEC filers and XBRL US Members can now also use the add-in to check filings for Data Quality Committee and SEC Filer Member issues in Excel and save time by using the tool.

XBRL Filed Data add-in in AppSource: https://appsource.microsoft.com/en-us/product/office/WA200002591

Get instructions and resources: https://xbrl.us/xbrl-api-community

Five U.S. federal agencies sought comment on financial institution use of AI and machine-learning; XBRL US’ response noted the need for machine-readable data to drive reliable outcomes in AI platforms. While the Request for Information focuses on financial institution use of AI platforms, the XBRL US letter took advantage of an opportunity to point out that regulators should also consider how financial data that the regulator collects from these institutions is used.

The five regulators, which include the Office of the Comptroller of the Currency, the Bureau of Consumer Financial Protection, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the National Credit Union Administration, all collect data from financial institutions that is used by data aggregators, regulators and analytics providers, as well as services offering AI platforms.

We urged regulators to ensure that the data they collect from financial institutions is equally available to all users, of high quality, and available in structured, standardized format. Providing financial institution data in machine-readable, structured format will ensure that it is easier and less expensive to analyze; and that AI platforms that leverage it, produce better, more reliable outcomes, not just for regulators but for the public as well.

The collection of credit rating data in XBRL format from NRSROs should be modified to reduce reporting burden, and improve the usefulness of reported data. XBRL US expressed this view in our response to an SEC data collection request for comment, noting five key changes that would improve efficiencies for NRSROs reporting credit rating data: 1) take advantage of technical enhancements in XBRL to swap out tuples for dimensions in the Credit Rating Taxonomy, and require NRSROs to switch to XBRL-CSV, instead of XBRL-XML; 2) require NRSROs to submit credit rating data directly to the SEC so that it can be published on EDGAR rather than on the NRSRO website; 3) encourage the use of the LEI and the Financial Instrument Global Identifier (FIGI), which are nonproprietary identifiers; and 4) make XBRL-formatted credit rating data available in a more timely fashion. These steps will improve efficiency and reduce reporting burden.

XBRL US urged the Federal Energy Regulatory Commission (FERC) to require only the use of the LEI to improve efficiencies and reduce costs. The FERC proposal on Data Collection for Analytics and Surveillance and Market-Based Rate Purposes, supported allowing market-based rate sellers to choose from one of three possible identifiers to be used as utility identifiers for certain upstream affiliates – a Company Identifier (CID), LEI, or a FERC generated ID (GID). The XBRL US letter supported the requirement that an identifier be reported, but strongly encouraged the Commission to require only one identifier type, and that the LEI be the identifier for all reporting entities. Furthermore, the letter encouraged the FERC to require that those entities that do not have an LEI, obtain one.

Upcoming XBRL US Webinars

XBRL Updates for FERC Filers, August 25, 2021 at 3 PM
Attend this free, 50-minute session for details on FERC plans for an updated Taxonomy – learn about the changes and how it will impact filers. Find out about the availability of FERC historical filings in machine-readable format, and see how you can render your own XBRL file into a human-readable format. Find out more details about the roll-out and why so many regulators and data consumers are embracing the XBRL standard.

Register: https://xbrl.us/events/210825/

Upcoming XBRL US Steering Committee and Other Member Meetings

The next Data Quality Committee meeting will be held Wednesday, September 29 at 9AM EDT. Look for registration details next month and get information about the Committee: https://xbrl.us/dqc

The Domain Steering Committee will meet Thursday, August 5, at 3PM EDT. https://xbrl.us/events/dsc-210805 – all XBRL US Members are invited to attend

The Communications Steering Committee will meet Tuesday, July 20, at 3 PM EDT. https://xbrl.us/events/csc-210720 – all XBRL US Members are invited to attend

The Regulatory Modernization Working Group will meet Tuesday, July 13, at 3 PM EDT. (membership@xbrl.us for details)

The Environmental Social Governance Working Group will meet Tuesday, July 20, at 4 PM EDT. (membership@xbrl.us for details)

XBRL US Members are encouraged to attend and get involved.

XBRL US Members are committed to engaging and collaborating with other members, contributing to the standard through involvement of their teams, and striving to build awareness and educate the market. Members of XBRL US represent the full range of the business reporting supply chain.

Not yet an XBRL US member? Maybe it’s time to consider joining XBRL US for yourself ($55 – $500/ year) or your organization (fees vary). Find out more about the benefits of membership and how to become involved by visiting https://xbrl.us/benefits.