In an ongoing effort to enhance the quality and utility of corporate financial data filed with the SEC, the Division of Corporation Finance has issued a sample letter addressing companies’ XBRL and Inline XBRL disclosures. This letter aims to provide constructive feedback and guidance to improve the clarity and accuracy of financial reporting.
The Financial Data Transparency Act (FDTA), which became law in December 2022, underscores the importance of high-quality financial data. Among its provisions, the FDTA requires the SEC to establish a program aimed at improving the quality of corporate financial data submitted by issuers.
The sample letter from the Division of Corporation Finance addresses several key areas, including Inline XBRL presentation, consistent reporting, compliance with Regulation S-K Item 402(v) related to pay versus performance, and proper tagging of financial statements and supplementary data. It emphasises the importance of correct XBRL tagging and compliance with SEC regulations.
Companies are encouraged to review this illustrative letter and consider its guidance as they prepare their XBRL and Inline XBRL disclosures. While the sample comments provided are not exhaustive, they offer valuable insights into common issues and best practices.
We would go further and describe these kinds of direct reminders to companies about these kinds of issues as a regulatory best practice. Vendors around the world, EU audit teams, and regulatory teams should find this useful.
For companies seeking additional guidance on structured data filing requirements, resources are available on the SEC website.