The U.S. Securities and Exchange Commission has announced it will allow companies to file financial statements using a format known as Inline XBRL as part of its effort to improve the transparency of and access to disclosures.
Companies are already required to structure financial statement data in their filings using the machine-readable format known as XBRL (eXtensible Business Reporting Language). The XBRL data is provided as an exhibit to HyperText Markup Language documents.
According to the SEC, the technology has evolved to the point that filers can now embed XBRL data directly into an HTML document through the Inline XBRL format.
“As a means of further assessing the usefulness of Inline XBRL, we are exercising our authority under Section 36(a) of the Securities Exchange Act of 1934 to permit, but not require, operating companies to use Inline XBRL in their periodic and current reports under the Exchange Act through March 2020,” the SEC said in an order issued Monday.
The agency said filing financial statements with Inline XBRL has the potential to provide a number of benefits to filers and investors. Among other things, it could decrease filing preparation costs, improve the quality of structured data and, by improving data quality, increase the use of XBRL data by investors and other market participants.
Additionally, the SEC said, allowing companies to use Inline XBRL “could facilitate the development of Inline XBRL preparation and analysis tools, provide investors and companies with the opportunity to evaluate its usefulness, and help inform any future commission rulemaking in this area.”
The SEC noted that errors have sometimes appeared in financial statement information submitted in XBRL that affect the quality of the data and its potential use by the public and the commission. “While these data quality issues may have multiple potential causes, we believe that some of these errors may result from the submission of XBRL tagged information as an exhibit separate from the [filing],” it said.
“Embedding XBRL data in an HTML document … may increase the efficiency and effectiveness of the filing preparation and review process,” the SEC suggested.