July 24, 2018

SEC Adopts Mandatory Inline XBRL

The Securities and Exchange Commission has amended its eXtensible Business Reporting Language (XBRL) rule to require operating companies to present XBRL financial statement information in “inline” format. Subject to a phase-in schedule, companies will be required to transition to Inline XBRL starting with fiscal periods ending on or after June 15, 2019. The Inline XBRL amendments will require companies to embed XBRL data directly into reports and registration statements filed with the SEC so that the document is both human-readable and machine-readable. This will eliminate the current need to file duplicative, separate copies of financial statement information in XBRL format. The amendments also eliminate the current website posting requirement and revise Form 10-Q and Form 10-K.

What Companies Should Be Doing Now

Short-Term Changes. Companies should take appropriate action to prepare for the changes in Form 10-Q and Form 10-K, and the elimination of the current XBRL website posting requirement, when the amendments become effective on September 17, 2018.

Mid-Term Changes. Companies should prepare to implement the Inline XBRL requirements in their first Form 10-Q filing after the applicable phase-in date. As part of their preparations, companies should take appropriate action to ensure their SEC filings that are subject to SEC XBRL requirements will comply with the Inline XBRL amendments. In particular, companies that file their own SEC documents should ensure that their software vendor has updated their software for Inline XBRL, and should undertake appropriate training and testing prior to the company’s phase-in date and any subsequent “live” filings. Similarly, companies that use an outside vendor should confirm that the vendor has updated its systems to comply with the Inline XBRL amendments.

Inline XBRL

The amendments will require operating companies to use Inline XBRL format when they submit financial statement information. Inline XBRL has been used by some companies as part of a voluntary SEC program. The amendments modify existing XBRL requirements, but will not change either the categories of filers or the scope of disclosures that are subject to XBRL requirements. The SEC also reiterated in the adopting release that the Inline XBRL amendments do not change current SEC positions with respect to officer certifications or auditor assurance, and do not prohibit companies from indicating the degree of auditor involvement (or lack of involvement) related to the financial statement information XBRL data.

The SEC believes that adoption of Inline XBRL will result in a variety of benefits, including reducing XBRL preparation time and effort over time; giving companies more control over the presentation of XBRL disclosures within an HTML filing; reducing the likelihood of inconsistencies between HTML and XBRL filings; and enhancing the usability of structured disclosures for investors through greater accessibility and transparency of the XBRL data and enhanced capabilities for XBRL data users, who will no longer have to view the XBRL data separately from the text of the documents.

Companies Subject to the Amendments

The amendments apply to all companies that are currently subject to XBRL requirements. This includes emerging growth companies, smaller reporting companies and foreign private issuers that file financial statements in accordance with U.S. generally accepted accounting principles (GAAP) or International Financial Reporting Standards as issued by the International Accounting Standards Board.

Phase-In Schedule

Companies that are that are currently required to submit financial statement information in XBRL will become subject to Inline XBRL requirements beginning with the first fiscal period ending on or after the date below:

  • June 15, 2019: large accelerated filers that prepare their financial statements in accordance with U.S. GAAP (for calendar year-end filers, the Form 10-Q report for the quarter ending June 30, 2019);
  • June 15, 2020: accelerated filers that prepare their financial statements in accordance with U.S. GAAP (for calendar year-end filers, the Form 10-Q report for the quarter ending June 30, 2020); and
  • June 15, 2021: all other filers, including foreign private issuers (for calendar year-end filers, the Form 10-Q report for the quarter ended June 30, 2021).

Companies that file Form 10-Q reports will not become subject to the Inline XBRL rules with respect to Form 10-K or any other form until the company has been required to comply with the Inline XBRL rules for its first Form 10-Q for a fiscal period that ends on or after the applicable compliance date shown above. This exception does not apply to foreign private issuers that file Form 20-F.

Website Posting Requirement

The Inline XBRL rules eliminate the requirement that companies post XBRL information on their websites. This change is effective immediately on the effective date, rather than the compliance dates shown above. As a result, a company that files a Form 10-Q or Form 10-K report on or after September 17, 2018, does not need to post the previously required XBRL data on its website.

SEC Forms and Other Amendments

As described in our recent alert SEC Expands Smaller Reporting Company Eligibility, the Inline XBRL amendments will change the facing (cover) page of Form 10-Q and Form 10-K as shown below beginning on September 17, 2018:

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). 

The amendments also make certain technical, conforming changes to other rules, including the definition of “current public information” under Rule 144(c)(1) of the Securities Act of 1933, the instructions contained in Forms S-3, S-8, F-3, F-10 under the Securities Act and Forms 10-Q, 10-K, 20-F and 40-F under the Securities Exchange Act of 1934, the rules governing hardship exemptions, and certain provisions of Regulation S-T, which governs filings made using the SEC’s EDGAR system.

Effective Date

The Inline XBRL amendments will become effective on Monday, September 17, 2018.