SEC Rules on Interactive Data

SEC Rules on Interactive Data

By Wasim ThahaDirector – Newsfile Corp.Past Chair – XBRL-CA

Final RuleFinal Rule

Summary

The final rule requires companies to provide to the Commission financial statements in interactive data format using eXtensible Business Reporting Language, or XBRL.

The final rule applies to domestic and foreign companies using U.S. GAAP and, eventually, to foreign private issuers using International Financial Reporting Standards as issued by the International Accounting Standards Board.

Final Rule (contFinal Rule (cont’’d)d)

Summary

The required tagged disclosures would include companies' primary financial statements, notes, and financial statement schedules. In addition certain company identifier information is required.

The disclosure in interactive data format would supplement, but not replace or change, disclosure using the traditional electronic filing formats in ASCII or HTML.

Filings are subject to limited liability within 24 months of the time the filer first is required to submit interactive data files. Additionally, the limited liability provision will terminate completely on October 31, 2014.

Three year phase-in schedule:

In year 1, the final rule applies only to domestic and foreign large accelerated filers that use U.S. GAAP and have a worldwide public float above $5 billion.

Quarterly reports on form 10-Q or annual report on Form 20-F or Form 40-F containing financial statements for a fiscal period ending on or after June 15, 2009.

In year 2, all other domestic and foreign large accelerated filers using U.S. GAAP would be subject to interactive data reporting.


Interactive Data Phase-inInteractive Data Phase-in

Three year phase-in schedule:

In year 3, all remaining filers using U.S. GAAP, including smaller reporting companies, and all foreign private issuers that prepare their financial statements in accordance with IFRS as issued by the IASB would be subject to the same interactive data reporting requirements.


Interactive Data Phase-in (contInteractive Data Phase-in (cont’’d)d)

Interactive data is required with a company's annual and quarterly reports, transition reports, and Securities Act registration statements. More specifically, the forms are as follows: The following forms under the 33 Securities Act:

S-1, S-3, S-4, S-11, F-1, F-3, and F-10

The following forms under the 34 Exchange Act: 10-Q, 10-K, 8-K, 20-F, 6-K, and 40-F

Forms 8-K and 6-K should be used when they contain updated interim financial statements or financial statements that have been revised to reflect the effects of certain subsequent events.

Submission FormatSubmission Format

The rules will not, however, require interactive data The rules will not, however, require interactive data related to MJDS forms (F-9, F-10, and 40-F) to be related to MJDS forms (F-9, F-10, and 40-F) to be submitted when the financial statements they contain submitted when the financial statements they contain are prepared in accordance with Canadian GAAP or as are prepared in accordance with Canadian GAAP or as an U.S. reconciliation. an U.S. reconciliation.

Companies registered under the Investment Company Companies registered under the Investment Company Act, business development companies or other entities Act, business development companies or other entities that report under the Exchange Act and prepare their that report under the Exchange Act and prepare their financial statements in accordance with Article 6 of financial statements in accordance with Article 6 of Regulation S-X will not be subject to the new rules. Regulation S-X will not be subject to the new rules.

Submission Format (contSubmission Format (cont’’d)d)

Each company’s initial interactive data submission, regardless of filing type will have a 30 day grace period, and thereafter would be permitted as an amendment.

In year 2 for the first filing that is required to have footnotes and schedules tagged using all levels of detail, filers will receive a 30 day grace period.

Grace PeriodGrace Period

Interactive data is also required to be posted on the company’s corporate web site, if it maintains one.

Interactive data would be required to be posted for at least 12 months on an issuer’s website.

A company cannot use a hyperlink to the SEC website to satisfy the requirement of posting the interactive data on its own website.

Company WebsiteCompany Website

Filers using U.S. GAAP are required to tag their financial Filers using U.S. GAAP are required to tag their financial statements using the most recent list of tags for U.S. statements using the most recent list of tags for U.S. Financial statement reporting as released by XBRL U.S. Financial statement reporting as released by XBRL U.S. and required by the EDGAR Filer Manual.and required by the EDGAR Filer Manual.

Similarly, filers using IFRS as issued by the IASB, will be Similarly, filers using IFRS as issued by the IASB, will be required to tag their financial information using the most required to tag their financial information using the most recent list of tags for international financial reporting, as recent list of tags for international financial reporting, as released by the IASCF and specified in the EDGAR Filer released by the IASCF and specified in the EDGAR Filer Manual.Manual.

Data Tagging DetailsData Tagging Details

The filer’s complete financial statements (i.e. the face of the financials) is required to be tagged in detail.

Footnote tagging is broken out into 4 different levels: Level 1 – Each complete footnote tagged as a single block of text. Level 2 - Each significant accounting policy within the significant

accounting policies footnote tagged as a single block of text. Level 3 – Each table within each footnote tagged as a separate

block of text. Level 4 – Within each footnote, each amount (i.e. monetary value,

percentage, and number) is required to be separately tagged. Narrative disclosures are not required.

Data Tagging Details (contData Tagging Details (cont’’d)d)

Level 1:


Level 2


Level 3:


Level 4:


Level 1 would be required in the first year of submission, Levels 1 through 4 would be required starting one year from the filer’s initial required submission.

For financial statement schedules as required by Article 12 of Regulation S-X, two levels would be required. Each complete financial statement schedule tagged as a block of

text. This is required starting in the first year. Each amount (i.e. monetary value, percentage, and number)

separately tagged. This will be required starting one year from the filer’s initial required submission.


The first filing of a registration statement would be required only after a price or price range has been determined and any time thereafter when financial statements are changed.

Financial statements contained in the registration statements under the Exchange Act on Forms 10, 20-F, and 40-F are not required to submit interactive data.


An interactive data file generally will be subject to the federal securities laws in a modified manner similar to that of the voluntary program under new rule 406T if the filer submits the interactive data file within 24 months of the time the filer first is required to submit interactive data files.

If a filer does not make the required submission, they will be unable to use short form registration statements on Form S-3, F-3, or S-8.

This disqualification will last until the submission is made. During this period, the filer will be deemed not to have available adequate current public information for the purposes of the resale exemption safe

harbor.

Liability and non-complianceLiability and non-compliance

Rule 406T -- Temporary Rule Related to Interactive Data Files [Effective Apr. 13, 2009, through Oct. 31, 2014.]

Scope. Section 232.406T addresses the liability for the Interactive Data File. An Interactive Data File is subject to the same liability provisions as the Related Official Filing except as provided in paragraphs (b) and (c) of this section.

In general. The Interactive Data File, regardless of whether it is an exhibit to a document incorporated by reference into filings:

Is subject to the anti-fraud provisions of section 17(a)(1) of the Securities Act, section 10(b) of the Exchange Act, Rule 240.10b-5 of this chapter, and section 206(1) of the Investment Advisers Act except as provided in paragraph (c) of this section;

Is deemed not filed or part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act, is deemed not filed for purposes of section 18 of the Exchange Act or section 34(b) of the Investment Company Act, and otherwise is not subject to liability under these sections; and

Is deemed filed for purposes of Rule 232.103.

Good faith attempts and prompt correction. Subject to paragraph (b) of this section, the Interactive Data File shall be subject to liability for a failure to comply with Rule 232.405, but shall be deemed to have complied with Rule 232.405 and would not be subject to liability under the anti-fraud provisions set forth in paragraph (b)(1) of this section or under any other liability provision if the electronic filer:

Makes a good faith attempt to comply with Rule 232.405; and After the electronic filer becomes aware that the Interactive Data File fails to comply with Rule 232.405,

promptly amends the Interactive Data File to comply with RUle 232.405.

Temporary section. Section 232.406T is a temporary section that applies to an Interactive Data File submitted to the Commission less than 24 months after the electronic filer first was required to submit an Interactive Data File to the Commission pursuant to Rule 232.405, not taking into account any grace period, but no later than October 31, 2014. After these dates, an Interactive Data File is subject to the same liability provisions as the Related Official Filing. This temporary section will expire on October 31, 2014.

http://taft.law.uc.edu/CCL/33Act/sec17.html#a.1

http://taft.law.uc.edu/CCL/34Act/sec10.html#b

http://taft.law.uc.edu/CCL/34ActRls/rule10b-5.html

The SEC’s website contains a portal for companies to make test submissions.

Companies may also use the previewer function to see how their files will look on the viewer prior to making a submission.

Previewer and ValidationPreviewer and Validation

Newsfile’s XBRL services

1. Understand the client

- Does the client currently use XBRL enabled software in their reporting environment?

- Does the client have the necessary resources to tag the XBRL in-house?

Newsfile XBRL ServicesNewsfile XBRL Services

2. Educate the client

- Explain the Taxonomy Creation Process

- Explain the Tagging Process

- Explain the different solutions (Outsourced vs Bolt- on vs Integrated)

Newsfile XBRL Services (contNewsfile XBRL Services (cont’’d)d)

3. Suggest the Best Solution for the Client

- Develop implementation plan

- In cases of Bolt-On or Integrated Solutions – Train & Prepare Internal Resources

- Support the client during and after implementation


4. Filing Solution

- Prepare Taxonomy and Consult with client

- Tag Financials and Respective Disclosures

- Review completed Instance Document

- File with appropriate Regulatory Body


4. Filing Solution detailed:

Our philosophy:

Process need to be segmented

Taxonomy Creation

Document Tagging



4. Filing Solution detailed (continued):


4. Filing Solution detailed (continued)

Upon finalizing the taxonomy, document tagging is performed on the finalized financial report (Form 10-Q, 10-K, 20-F, 40-F, etc.)


Resources

www.xbrlit.com - FAQs and information on XBRL for SEC Reporting Issuers

www.xbrl.org – XBRL International’s website

www.xbrl.ca – XBRL Canada’s website

www.newsfilecorp.com – Newsfile’s official website

Questions?

Thank you!Please contact Wasim Thaha at [email protected] or 416-806-1750 for more information

Documents

SEC Rules on Interactive Data