2012 U.S. GAAP Financial Reporting, IFRS Taxonomy Released Simultaneously
The IFRS Foundation, the oversight body of the International Accounting Standards Boards (IASB), have completed the first part of its project to address requests by regulators and preparers to extend the full International Financial Reporting Standards (IFRS) XBRL Taxonomy, along with the release of the proposed 2012 U.S. GAAP Financial Reporting Taxonomy by the Financial Accounting Standards Board (FASB) for public comment.
The IFRS XBRL Taxonomy is used to help those filing IFRS financial statements electronically to ‘tag’ the information with identification tags (called ‘concepts’ in an XBRL taxonomy). Currently, the IFRS taxonomy includes all core concepts included in IFRSs as issued by the IASB.
However, preparers often need to provide more detailed financial information than is reflected by the core IFRS concepts. To ensure that those creating and using electronic filings do not need to create their own extensions to the IFRS taxonomy, the IFRS Foundation has created an ‘extension taxonomy’ by analysing and drawing from common practice.
For instance, although IFRSs require the disclosure of an analysis of expenses, the IFRSs do not include a prescriptive listing of all the possible categories of expenses. The common-practice taxonomy includes concepts for the most commonly used types of expenses, such as ‘sales and marketing’.
The interim taxonomy provides about 350 extensions for the most common concepts used in the financial statements. Work is continuing on extensions to the detailed tagging of the footnotes to the financial statements. The IFRS XBRL team expect to publish proposals in October 2011.
The common-practice concepts are in line with IFRS requirements and will help to alleviate the burden on preparers and to increase the comparability between financial statements in accordance with IFRSs that are electronically submitted.
On the other hand, the U.S. GAAP Financial Reporting Taxonomy is a list of computer-readable financial reporting labels coded in XBRL, an open-source computer language that allows companies to tag precisely the thousands of pieces of financial data included in typical long-form financial statements and related footnote disclosures. The tags allow users of financial statements to electronically search for, assemble, and process data so that the data can be readily accessed and analyzed by investors, analysts, journalists, and regulators.
The proposed 2012 U.S. GAAP Financial Reporting Taxonomy contains updates for accounting standards and other recommended improvements to the official taxonomy, which is used by public issuers registered with the U.S. Securities and Exchange Commission (SEC).
The 60-day comment period is intended to solicit feedback on these updates from users of the taxonomy and to provide SEC filers, service providers, software vendors, and other interested parties with the opportunity to become familiar with and suggest revisions to the taxonomy, including incorporating new elements for current filings.
The 2012 U.S. GAAP Financial Reporting Taxonomy is expected to be finalized and published in early 2012.
In early 2010, the Financial Accounting Foundation (FAF), parent organization to the FASB and the Governmental Accounting Standards Board, assumed maintenance responsibilities for the taxonomy. The FAF and the FASB assembled a team of technical staff dedicated to updating the taxonomy for changes in U.S. GAAP, identifying best practices in taxonomy extensions, and technical enhancements.
The deadline to submit written comments is October 31, 2011.