On September 7th, the SEC’s Division of Corporation Finance indicated it may begin issuing comment letters to issuers concerning their XBRL disclosure documents. The Division has released a sample letter that a company may receive from the SEC once a company’s submitted filing is reviewed. The letter directs the issuer to revise or update their disclosure and respond to the SEC’s comments.
Structured Data Filing Requirement at a Glance
2009 — The SEC’s adopts rules that require companies to provide the information from the financial statements in their registration statements and periodic and current reports in machine-readable format using eXtensible Business Reporting Language (XBRL).
2018 — The SEC begins requiring the use of Inline XBRL for financial statement information. Since then, the SEC has required additional disclosures to be made using XBRL and Inline XBRL. The SEC has noted that investors and market participants have gained experience with XBRL and Inline XBRL and that there is increased evidence that data in these formats is useful to investors.
2022 — The Financial Data Transparency Act (FDTA) becomes law. The FDTA requires 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 Act (the Securities Act) and the Securities Exchange Act of 1934 (the Exchange Act).
The Division has on occasion provided comments to companies regarding disclosure requirements (as they relate to XBRL and Inline XBRL) through the Division’s selective reviews of filings made under the Securities Act and the Exchange Act. The sample letter contains example comments that the Division may issue to certain companies, and those comments will depend on the particular facts and circumstances and type of filing under review. The sample comments are not a comprehensive list of the issues that a company should consider as it prepares its XBRL and Inline XBRL disclosures. The Division strongly encourages companies to consider the letter’s sample comments and additional guidance in this area as they prepare their disclosure documents.