Proposed Update to the IFRS Taxonomy 2018 Released by the IFRS Foundation
On September 20 2018, the IFRS Foundation published Proposed IFRS Taxonomy 2018 Update PTU/2018/1 relating to Common Practice (IFRS 13 Fair Value Measurement), which is now open to the public for consultation.
According to the IFRS Foundation, the proposed amendment includes “changes to the IFRS Taxonomy 2018”, reflecting common reporting practice for the disclosure requirements in IFRS 13, including:
- sensitivity of fair value measurement to changes in unobservable inputs; and
- quantitative information about significant unobservable inputs used in fair value measurement.”
These changes have been proposed following the IFRS Foundation’s analysis of current reporting practice by companies when reporting elements required under IFRS 13. The IFRS Foundation hopes that such changes should allow for “more consistent tagging of financial statements prepared applying IFRS Standards by reducing the need for companies and regulators to create their own taxonomy elements.”
The consultation will run until November 19 2018. Once comments have been received, the IFRS Foundation will analyze the feedback – a process that is expected to take a few months to complete.
The relevance of the proposed update to SEC filers
Ideally, anyone potentially impacted by the proposed taxonomy update, or anyone with an interest in improving the quality and consistency of financial statement reporting should consider submitting their comments to the IFRS Foundation.
Interested parties who may have reason to provide their comments include investment analysts, managed tagging software providers such as XBRL tagging software companies or SEC filing software companies, as well as entities such as Foreign Private Issuers that undertake SEC reporting and SEC filings using IFRS taxonomy, among others.
Despite the recent proposal to update the IFRS Taxonomy 2018, it is worth noting that the SEC has stated that, in respect of SEC reporting, the IFRS Foundation’s proposal “does not indicate Commission approval of any potential regulatory changes related to the EDGAR Filer Manual.” Instead, the SEC highlights that information relating to any changes to the EDGAR Filer Manual can be found on the SEC’s website.
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