FASB Launching XBRL Taxonomy Simplification Initiative
The effort comes in response to stakeholders over the past couple of years stating that the Taxonomy is complex and that measures should be considered to make it simpler.
XBRL is an electronic standard for tagging business and financial reports designed to increase the consistency, transparency and accessibility of business information by using a uniform machine-readable format. It is is the standard under which the U.S. Securities and Exchange Commission (SEC) requires U.S. public companies preparing their financial statements in accordance with U.S. generally accepted accounting principles to tag and submit their financial statements.
The U.S. GAAP Financial Reporting Taxonomy is a list of computer-readable tags within XBRL that allows organizations to label precisely the thousands of pieces of financial data that are included in typical long-form financial statements and related footnote disclosures. The tags allow computers to automatically search for and assemble data so those data can be readily accessed and analyzed by investors, analysts, journalists, and SEC staff.
Through the simplification initiative, FASB XBRL Staff intend to identify aspects of the Taxonomy that could be simpler or more “suitable for use”Through the simplification initiative, FASB XBRL Staff intend to identify aspects of the Taxonomy that could be simpler or more “suitable for use” and to make proposals to address these issues. Areas for improvement commonly expressed include:
- Simplifying the ability to find appropriate elements in the Taxonomy
- Reducing ways available to tag a reported fact
- Considering ways to address Extension elements that can be challenging for users
- Managing year to year Taxonomy changes
This initiative is consistent with the FASB’s other efforts to reduce complexity and increase the simplification of financial reporting“Through the simplification initiative, we are looking for ways to simplify the product and make it easier to use wherever possible while at the same time preserving or enhancing the high quality of information that U.S. public companies provide to the SEC,” the vice chairman said. “This initiative is consistent with the FASB’s other efforts to reduce complexity and increase the simplification of financial reporting.”
Input will be sought from key stakeholders representing preparers, service providers, assurance service providers, data aggregators, and investors. Once the initiative has been launched, initial steps will include interviews with these key stakeholders to more fully identify areas for improvement.
Following the interviews, XBRL Staff will review the results, synthesize the information gleaned, and consider what future actions might be appropriate.
Each year, the FASB is required to submit an updated Taxonomy to the SEC for review and acceptance. Changes in the Taxonomy from year-to-year reflect changes in U.S.GAAP, identified common reporting practices in filer taxonomy extensions, and other technical enhancements.
XBRL Staff work closely with the staff of the SEC, the staff of the International Accounting Standards Board, XBRL US, Inc., investors, issuers, accounting firms, and other stakeholders to develop updates that are of the highest quality.
Additional information on the U.S. GAAP Financial Reporting Taxonomy and related topics are available on the FASB website.