As reported by Accounting Today, the SEC is continuing to advise foreign private issuers (FPIs) that no suitable IFRS taxonomy exists which they could use in their XBRL, therefore they continue to be exempt from the need to file. Contrary to the Accounting Today headline, this is not a change. It has always been the case that a suitable base taxonomy for whatever accounting principles a company uses must exist and be approved by the SEC, such approval being signalled by being listed on the approved taxonomies page.
But there is a new exposure draft of the core IFRS taxonomy, is that a step forward?
Looking at the overview document, yes. One of the persistent criticisms of the IFRS taxonomy has been the lack of labels that serve as documentation for the concepts. Not having these labels available is a severe constraint on software trying to assist the user in tagging their documents correctly. These labels help users understand what a tag stands for, and choose the right tag from several alternatives.
At less than 4,000 tags, the IFRS 2013 taxonomy is still much smaller than the US GAAP Taxonomy. But it can be argued that the UGT is too large. My own research has shown that large portions of the UGT have never ben used, or minimally used. As shown during presentations at the XBRL US Data Forum this week in Las Vegas, the UGT contains multiple options to tag the same information – a situation that simply confuses users and makes analysis harder than it should be.
IMHO, this interim draft shows that the IFRS Foundation is listening to concerns and the recent iterations of the taxonomy should be usable by FPI filers with the SEC. Make it so.
PS – I apologize for not supplying a link to the original SEC text. Regular readers of this blog probably know and I hope appreciate that I prefer to link directly to primary sources, not other media outlets. If anyone has the link, please send it in a comment and I will add it. Many thanks.