(Tag Your 10-K with XBRL, Tag Your 10-Q with XBRL, Tag Your 20-F with XBRL)
Preparing your financial statements (Form 10-Q, Form 10-K, Form 20-F) for the XBRL reporting required by the SEC is a two-step process: mapping comes first, followed by the actual XBRL tagging of the financial report itself.
- Mapping matches your financial statements to the US GAAP XBRL taxonomy.
- Tagging is the process of using the “plan” created in the mapping process, and actually applying the XBRL tags to your filing documents.
MAPPING YOUR FINANCIAL STATEMENTS TO THE US GAAP TAXONOMY:
Mapping can be performed within an embedded solution of your choice and can also be used to manage your XBRL tags and extensions moving forward. Mapping is largely performed once – once a business or financial fact is mapped to a taxonomy element, the mapping generally doesn’t change. It is very important that you have a good idea to have a working understanding of the XBRL US Implementation Guide.
To begin, first import the US GAAP XBRL taxonomy into your embedded solution. Using your XBRL financial reporting software, perform a mapping of your business’s individual disclosures and matching them to the XBRL tags contained within the US GAAP XBRL taxonomy.
The “Presentation” link in the Taxonomy is the best place to begin matching your disclosures to the US GAAP taxonomy. If you can’t easily find the Element you’re seeking, try doing a search in the taxonomy, using the “search” function in your solution.
Mapping should be a methodical process. areas An embedded solution will help you manage different disclosures such as the Balance Sheet, Income Statement, Cash Flow Statement, Statement of Changes in Stockholders Equity, and more as individual components.
- Mapping Best Practice:
- Regardless of how you decide to approach the mapping process, it’s important that your Finance team is in control of the strategic decisions relating to your eventual selection of Elements and tags.
- An outside provider might have a better understanding of taxonomy elements and there specific meanings, but it is very unlikely that they would possess the in depth knowledge your Finance team has about your financial amounts and how each was derived.
Though most mappings will persist from one period to another, minor edits may be required from time to time. For example, if a new line item is added to a financial statement, the new line item would need to be mapped to the appropriate taxonomy element. Other exceptions that might require modifying a mapping could include the issuance of a new US GAAP taxonomy, where an element previously used was deleted; or discovery of a mapping error that needs correction.
TAG YOUR FINANCIAL REPORT WITH XBRL:
Now that mapping is complete, it’s time to begin tagging your Form 10-Q, Form 10-K, or Form 20-F with XBRL. Tagging is performed in an XBRL tagging and output solution, such as Trintech’s Cadency Complete financial reporting tool, an embedded XBRL solution which reduces ongoing maintenance effort and cost by persisting tags from one period to the next using “smart” reporting templates.
Refer to our earlier blog post here about the importance of the “Map >> Tag >> Validate” lifecycle. It’s essential to validate your mapping, extension taxonomy, and XBRL tagging efforts early and often – this will save you time and headache down the road.
While the details involved in actually tagging your financial report are too extensive to compile in this blog post, several best practices are beginning to materialize from the deluge of filings the SEC has seen to date.
- Context Is Important:
- A particular tag may be re-used on the Income Statement for three separate years (giving it three separate contexts). In the case of Revenue, the actual revenue and the pro-forma revenue is presented for only one year. However, when you see in the SEC previewer the revenue information for all three years is displayed.
- This is acceptable, and not considered an error, because if the same tag is used at different places then it will pick that tag for all the years presented even though in your actual disclosure it is presented for only one year.
- Labels Are Tricky:
- If you’re using the same label and label type for multiple tags, validation errors might occur.
- Pay attention to the details. If you’ve chosen a particular tag to represent shares item type rather than monetary item type, make sure you pick the correct tag. Picking
StockIssuedDuringPeriodValueTreasuryStockReissued rather than StockIssuedDuringPeriodSharesTreasuryStockReissued could result in a report that incorrectly represents the monetary information as share type.
- Sometimes a number may be showing as a positive value on the income statement, however in a disclosure note it may have been shown in parenthesis as a negative number. Check for the negated label sign.
- Level 4 XBRL Tagging Requires More Effort:
- Apart from monetary and share information the information presented in percentages, share price, useful life in years etc should also be tagged.
- Make sure if the information is presented as an instant or duration.
- Where there is a range for eg exercise price of options range from $1-$5, the concept of minimum exercise price and maximum exercise price should be used to present the range.
After the tagging and validation work is done, the preparers should review the entire instance document using a solution like Cadency Complete in addition to uploading the instance documents to the SEC previewer. At a first glance you may notice inconsistencies in the presentation. The SEC Reporting Manager should conduct a detailed tracing of every element, its label and presentation from the rendered statements to the source document (eg 10-K, 10-Q, 20-F). Be careful to validate that the labels created for each Element match the information presented on the financial report especially for the face financials and tabular data.
Ensure that the dimensional table accurately reflects the information you intended to display. Sometimes while designing the table you may have intended to present the table in a particular format, however the person performing the mapping may have misunderstood, and the dimensional table may not accurately reflect your intent.
Lastly, do multiple reviews of the rendered information to your source document. Each review will bring out few errors until you have eliminated all errors. The review should also be done by people who have not actively involved in the XBRL tagging process which can give an independent outlook.
Embedded solutions like Cadency Complete make it easier for you to perform the overall mapping/tagging/review process in an iterative manner. So as you review your options for moving XBRL in-house you can keep that in perspective.