Requirement for Foreign Private Issuers to Provide Financial Statements in “Interactive Data” Format using XBRL
As we near year end, we would like to remind our clients and friends that foreign private issuers that use International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”) are now required to file their financial statements filed with the Securities and Exchange Commission (“SEC”) in “interactive data” format using eXtensible Business Reporting Language (“XBRL”).
What is “interactive data” format using XBRL?
Interactive data requires that all issuers registered with the SEC include with certain SEC filings a new exhibit that “tags” the data contained in financial statements and accompanying footnotes and schedules using XBRL. These XBRL tags can be read electronically by various software programs without the need to manually retype the data, facilitating cross-company and industry-wide comparisons.
Interactive data (which cannot be read by humans) is in addition to, and does not replace, current SEC disclosure obligations or the required content of financial statements.
The implementation of interactive data was phased in over time, and foreign private issuers that prepare their financial statements using IFRS are being phased in for fiscal periods ending after December 15, 2017.
What are the interactive data obligations?
Interactive data obligations based on SEC rules and releases and our conversations with SEC officials in the past include the following:
• XBRL is first required in an issuer’s annual report on Form 20-F or 40-F that contains financial statements for a period ending on or after December 15, 2017. Thus, Israeli foreign private issuers are required to comply with the requirement for their Form 20-F for fiscal year 2017 due April 30, 2018.
• XBRL is required for financial statements as well as financial statement footnotes and schedules. Footnotes and schedules each may be tagged as a single block of text in the first year. Thereafter, a filer also will be required to tag the detailed quantitative disclosures within the footnotes and schedules
• The XBRL files must be posted on an issuer’s website for 12 months (note that a link to the SEC’s website is not sufficient).
How will XBRL affect the preparation of my filings?
Extended lead time is required for an issuer to properly implement interactive data, including determining how best to tag financial statements (i.e., whether to use an outside vendor or in-hour personnel) and preparing for website posting. In addition, there are significant start-up costs for use of a financial printer to perform the tagging function. Issuers that do not provide or post required interactive data files on the required dates will be deemed not current in their reporting obligations until such files are provided or posted. To ensure that foreign private issuers timely meet their XBRL filing obligations, we recommend that issuers begin to plan for implementation of interactive data at this time.
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This memo is intended only as a brief outline of the issues described and is not meant to be a substitute for legal advice. For additional information please contact Adv. Perry Wildes [perry@gkh-law.com] or any other member of our U.S. securities group.
