On September 7, 2023, the U.S. Securities and Exchange Commission’s (SEC’s) Division of Corporation Finance (Corp Fin) issued guidance on XBRL disclosures in the form of a Sample Letter to Companies Regarding Their XBRL Disclosures.
In 2009, the SEC adopted rules requiring public companies and foreign private issuers to provide the financial statements (including the financial statement footnotes and any required schedules to the financial statements) accompanying their registration statements and periodic and current reports in machine-readable format using eXtensible Business Reporting Language (XBRL) by submitting them to the SEC in exhibits to those filings and posting them on their websites, if any. In 2018, the SEC adopted rules requiring this same financial information to be submitted to the SEC in Inline XBRL format rather than XBRL format, and eliminating the requirement for filers to post the interactive data files on their websites. Inline XBRL is both human-readable and machine-readable, allowing filers to embed XBRL data directly into the filing rather than tagging a copy of this information in a separate XBRL exhibit.
During SEC Chair Gary Gensler’s tenure, Inline XBRL requirements in company filings have expanded beyond financial information and cover page data to include, for example, auditor information and pay versus performance disclosure. In addition, while most are still subject to compliance transition periods, Inline XBRL requirements have been included in several SEC rulemakings (e.g., rulemakings related to filing fee exhibits, clawback disclosure, insider trading arrangements and related disclosures, share repurchase disclosure, and cybersecurity disclosure). As discussed in the introduction to the sample comment letter, in December 2022, the Financial Data Transparency Act became law, requiring the SEC “to establish a program to improve the quality of the corporate financial data filed or furnished by issuers under the Securities Act of 1933 (the Securities Act) and the Securities Exchange Act of 1934 (the Exchange Act).” As part of this program, the SEC is required to, among other things, include the issuance by Corp Fin of comment letters requiring correction of errors in data filings and submissions, where necessary, and submit a report to the applicable U.S. Senate and House committees regarding the public and internal use of machine-readable data for corporate disclosures. The SEC published its first Semi-Annual Report to Congress Regarding Public and Internal Use of Machine-Readable Data for Corporate Disclosures in June 2023. The Appendix to this report includes a helpful bullet point list of the disclosures required to be submitted in Inline XBRL, by filing.
Given the expansion of, and heightened focus on, Inline XBRL, it is not surprising that Corp Fin posted a sample comment letter regarding these disclosures. In the introduction to the sample comment letter, Corp Fin reminds readers that the “sample comments do not constitute an exhaustive list of the issues that companies should consider as they prepare their XBRL and Inline XBRL disclosures.” The sample comments include the following:
Item 405 of Regulation S-T
- Your filing does not include the required Inline XBRL presentation in accordance with Item 405 of Regulation S-T. Please file an amendment to the filing to include the required Inline XBRL presentation.
- The common shares outstanding reported on the cover page and on your balance sheet are tagged with materially different values. It appears that you present the same data using different scales (presenting the whole amount in one instance and the same amount in thousands in the second). Please confirm that you will present the information consistently in future filings.
Pay versus Performance
- Disclosure under Regulation S-K Item 402(v) must be in Inline XBRL, in accordance with Item 405 of Regulation S-T and the EDGAR Filer Manual. Please ensure that you have provided the appropriate Inline XBRL tagging for all the required Item 402(v) data points.
- Refer to the [relationship disclosures] graph. Although it is permissible to combine one or more sets of relationship disclosures under Regulation S-K Item 402(v)(5) into one graph, table, or other format, note that you must still provide separate XBRL tags for each required item. Please ensure that you have provided the appropriate Inline XBRL tagging for all the required Item 402(v) data points.
Financial Statements and Supplementary Data
- You have used different XBRL elements to tag the same reported line item on the income statement from period to period. Please provide us your analysis as to how you concluded that the results reported necessitated the change in the element. Alternatively, if you conclude that the change from period to period was not necessary to communicate a change in the nature of the line item, confirm that you will ensure that your choice remains consistent for line items from period to period.
- We note that instead of using an XBRL element consistent with current U.S. GAAP in your income statement, you instead used a custom tag. Custom tags are to be used by filers when an appropriate tag does not exist in the standard taxonomy. See Item 405(c)(1)(iii)(B) of Regulation S-T. Please tell us why the current U.S. GAAP tag is not applicable, or alternatively revise your disclosure, beginning with your next filing, to correctly tag this disclosure.
 See Interactive Data to Improve Financial Reporting, Release No. 33-9002 (adopting release) [74 Fed. Reg. 6,776 (Feb. 10, 2009)] as corrected by Interactive Data to Improve Financial Reporting, Release No. 33-9002A [74 Fed. Reg. 15,666 (Apr. 7, 2009)].
 See Inline XBRL Filing of Tagged Data, Release No. 33-10514 (adopting release) [83 FR 40846 (Aug. 16, 2018)].