At the request of subscribers, Compliance Week offers a Remediation Center, in which readers can submit questions—anonymously—to securities and accounting experts. Compliance Week’s editors will review all questions and then submit them—confidentially, of course—to specialists who can address the issues. The questions and responses will then be reprinted in a future edition of Compliance Week. Below is one of the Q&As; ask your own questions by clicking here.

DETAILS

Hannon

Neal Hannon is a senior XBRL consultant with the Gilbane Group based in Manville, RI. The consulting practice has helped companies understand the SEC XBRL mandate and has helped software companies introduce XBRL solutions into the marketplace. Hannon was the director, Financial Reporting Technologies for the Financial Accounting Foundation (FAF). The FAF provides oversight and funding for FASB and GASB. Hannon played a significant role at FAF to organize and support the U.S. financial community to improve the U.S. GAAP XBRL taxonomy. Prior to joining the FAF, Hannon was a member of the accounting departments at the University of Hartford and Bryant University. In addition, Hannon has held various controllership positions with companies such as United Technologies and Monsanto.

Hannon has authored over 60 articles and dozens of blog postings on XBRL. He has presented XBRL at national and international conferences since 2001. An active member of the XBRL consortium since 2000, Hannon served as the first education committee chairman and was a member of the first XBRL US steering committee.

Active in the IMA for over 25 years, Hannon served on the IMA’s national information technology committee, chairing the group from 2004 to 2006. He also served on the IMA’s board of directors (2001-2006) and the IMA’s executive committee (2004-2006). Currently, Hannon is a member of Financial Executives International (FEI) and technical advisor to the FEI’s committee on Finance and Technology.

Remediation Center

Click Here to Return to the Remediation Center

Submit a Question to the Remediation Center

Warning, Disclosure

Compliance Week’s Remediation Center is an information service only. Answers to questions should not be construed to be legal guidance. Consult with your auditors, internal counsel, external counsel, and/or other securities experts on all critical compliance and governance matters.

Specialists are solicited by the editor to answer Remediation Center questions based on their knowledge of the subject matter and their ability to provide commentary in their particular area of expertise. In some cases, the experts who answer questions in the Remediation Center may also be Compliance Week subscribers, or may work at firms that advertise in Compliance Week.

Related Resource

Securities and Exchange Commission XBRL Taxonomies

QUESTION

I’m in charge of external reporting at my company, a Fortune 500 business, and I’m at a loss about this XBRL business. I know the SEC wants us to start filing XBRL-tagged exhibits with our quarterly statements, and I had been planning to use the taxonomy for U.S. Generally Accepted Accounting Principles published by XBRL U.S. But now I find out that the taxonomy isn’t compatible with the new Accounting Standards Codification, and XBRL U.S. won’t have a replacement taxonomy out until 2010!

So I have two questions. First: Any advice on what I should do right now? And more broadly—aren’t these people talking to each other? I’m rather annoyed by all this.

ANSWER

Excellent questions. First a little background, then we’ll discuss what steps you can take right now.

XBRL taxonomies listed on the Securities and Exchange Commission’s Website are the officially accepted base taxonomies for filing required XBRL exhibits. Companies can extend the taxonomies to accommodate unique reporting that is not currently in the base taxonomies. The reference database associated with both the 2008 and the 2009 XBRL taxonomies, as you correctly note, use the now-outdated U.S. GAAP hierarchy.

XBRL U.S. and the Financial Accounting Standards Board did release a new file on Aug. 4 that contains links to FASB’s Accounting Standards Codification project for most XBRL elements. If you look at it, you’ll find links from the old GAAP hierarchy to the new GAAP contained in Codification.

For example, if you open the new release and select “cash” from the listing “Statement of Financial Position,” you’ll see references to both the old GAAP (Financial Accounting Standard No. 95, Paragraph 7) and the new Codification (ASC 210-10-45-1). Clicking on the link provided on the display will bring you to a FASB log-in page for the Codification. Once logged in, the link will take you to Section 210-10-45-1 of the Codification, which will display information about the classification of current assets.

Here’s what XBRL U.S. says about the new links in the reference database that point to Codification:

[F]iles are for information purposes and are not recognized as part of the official 2009 taxonomy by the SEC. The Codification linkbase file should not be referenced as part of a company’s filing as it will not be recognized by the SEC EDGAR system. Codification files can be used by both consumers of XBRL data and by filers as reference information to understand the origin of individual elements.

In other words, the official XBRL reference database in the 2009 taxonomy will not contain FASB Codification references. There will, however, be a link to the new Codification literature contained in a file that resides outside of the official taxonomies. You will be on your own to establish whether or not your choice of an XBRL element is aligned with official U.S. GAAP. The reference database that comes with the 2009 U.S. GAAP taxonomy cannot be altered by a filer. From the EDGAR filing manual: “Companies must not refer to the base reference linkbase(s) anyway or include any new references for their own concepts.”

The new extension taxonomy provides pointers only to the public sections in the Codification. In other words, if you are in an XBRL tool (which almost everyone will be when working with XBRL) and want to see the authoritative literature, the hyperlink takes you out of your XBRL software and asks you to log into the FASB Codification to see the results. This inconvenience should be rectified in the SEC’s next release of a taxonomy, slated for sometime early next year. Meanwhile, those looking to discover a direct link from XBRL elements to the underlying authoritative literature will have to do some discovery work on their own or wait for further XBRL software developments to make the linkage easier to use.

For the remainder of 2009, use all available resources to choose the closest accounting fit between your company’s accounting and the XBRL element in the 2009 taxonomy. That should include tracing the links back to the Codification to ensure there are no accounting conflicts. Once we move into 2010, the official taxonomy reference linkbase will contain FASB Codification references only.

To answer your second question: Yes, FASB, the SEC, and XBRL U.S. have all been cooperating since 2006 regarding Codification and the U.S. GAAP taxonomy. The XBRL taxonomy for 2009 was authored by XBRL U.S., reviewed by FASB, and released earlier this year to the SEC. The SEC worked from April through July to make adjustments to permit the SEC EDGAR system to accept the new taxonomy.

When Codification replaced the old GAAP hierarchy on July 1 (effective for filings after Sept. 15), the updates were not ready to be inserted in the official taxonomy nor to be accepted by the SEC EDGAR system. The only additional step that could be taken at this point is for the SEC to create a new reference database with Codification references only and modify EDGAR to accept the new linkbase. That will happen with the 2010 release, although it would be nice to have it in place by the time third-quarter 2009 filings are due.

Topics