IFRS – US GAAP: XBRL challenges explained for 20-F and 40-F filers

The clock is ticking for Foreign Private Issuers using IFRS accounting standards to comply with the XBRL / inline XBRL mandate by the SEC. Here are a few key factors firms should consider when evaluating the best fit to prepare their 20-F and 40-F files in XBRL.

  1. Choose a single vendor for both XBRL and EDGAR
  2. Plan for inline XBRL in advance
  3. Carry out a test XBRL instance in advance
  4. Choose a vendor with prior IFRS expertise
  5. Focus on XBRL data quality

 

With multiple departments involved in the preparation of 6-K and 20-F reports, firms often choose different vendors to prepare their EDGAR and XBRL instances for filing with the SEC. Firms need to plan in advance and could choose inline XBRL, a format that is both human and machine readable, for their first filing, further optimizing the time taken for reviewing and ensuring high quality in structured XBRL data, which is beneficial to investors.

With the inline XBRL mandate most likely being implemented in three phases starting with Accelerated Filers and Large Accelerated Filers in January 2018, US-GAAP users and IFRS users need to plan in advance for the inline XBRL mandate. In addition, IFRS users should plan for the XBRL mandate. Note that 70% of all Foreign Private Issuers fall under the Large Accelerated Filer and Accelerated Filer categories.

At DataTracks we understand the cumbersome onboarding process that CFOs and corporate secretaries face. We recommend preparing a test XBRL instance using a 20-F / 40-F filing for the year 2016 to 2017 that has been filed with the SEC in EDGAR. This will help in understanding how the process works for the upcoming 2018 XBRL mandate, allowing a hassle-free XBRL first submission to the SEC.

An interesting pattern from the quality survey conducted by XBRL Squarespace (an initiative by Charles Hoffman) is that the complexity of XBRL preparation is higher for annual filings (10K) over the quarterly filings (10Q), with vendors finding it difficult to maintain the same quality standards across the different filings. With the complexity of a 20-F / 40-F being higher and being an annual XBRL filing, it is a cumbersome process to achieve accuracy of 97% and above. Outsourcing XBRL and inline XBRL to IFRS / US-GAAP experts therefore plays a key role in achieving high quality for the first filing.

About DataTracks

DataTracks strives to provide cutting-edge regulatory reporting technology across the globe. We are the preferred vendor for three leading financial printers in the US and have helped clients prepare over 8,000 XBRL Exhibits and 3.2 million HTML (EDGAR) pages for submission to the SEC in the US.

DataTracks has multiple products for European Regulations such as AIFMD, CRD IV and Solvency II Pillar 3, and has strong footprints in Europe and Asia serving over 4,000+ clients with compliance reports to the HMRC in the UK, Revenue in Ireland, ACRA in Singapore, and MCA in India.