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Foreign Filers and XBRL Reporting Requirements

As part of an effort to increase the accessibility of financial information for investors and the business community at large, the SEC in recent years has been in the process of incorporating XBRL (eXtensible Business Reporting Language) into its filing requirements. XBRL is an accounting language based on the use of data tags within financial documents. In theory, XBRL provides access to financial data that otherwise would be difficult to obtain (at least in aggregate); however, inconsistencies between actual filings and XBRL filings do exist. In addition, XBRL has not been fully adopted by international SEC registrants. Among these registrants there are several different accounting standards in use, only some of which work in conjunction with XBRL.

As of June 15, 2011, all SEC registrants using US GAAP as their accounting standard are required to file XBRL statements. In addition, foreign issuers using IFRS/IASB as their basis of accounting are also technically required to include XBRL, though in this case it is a little more difficult, as no formal XBRL taxonomy has been approved by the SEC for use with IFRS/IASB. This, in practice, means that there is a de facto exemption for IFRS filers, at least until a taxonomy is accepted.

What percentage of international SEC registrants have adapted these new XBRL rules? We checked the Audit Analytics Audit Opinion database to find all companies who filed a 20-F or 40-F with the SEC during calendar year 2013. We found that 478 out of 827 registrants did not file XBRL along with either their 20-F or 40-F, or an associated amended filing.

For the 349 registrants that did file XBRL, the following table shows how the XBRL was included, whether with the initial filing or an amended filing.

86 (25%) of the 20-F or 40-F filers that used XBRL financial statements did not include XBRL documents with their initial 20-F or 40-F; instead, these registrants subsequently filed an amended 20-F/A or 40-F/A with the XBRL attached.

The next chart presents a breakdown of SEC 20-F and 40-F filings and whether they filed XBRL statements, sorted by accounting standard for the year 2013 (click to expand).

According to our data, 96% (344/360) of foreign filers using US GAAP included XBRL financial statements with their 2013 filings. Of those international filers using IFRS/IASB standards, less than 2% included XBRL. No filers using another accounting standard used XBRL at all.

The SEC states on their website that the incorporation of XBRL is a “phasing in” process and not necessarily a strict guideline at this point. As we can see from this data, the phasing in of non-US GAAP filers is decidedly a work in progress. We wonder how this relates to the long-discussed “convergence” between US GAAP and IFRS. Given that convergence seems to be on indefinite hold at the moment, is it more or less likely that an XBRL taxonomy will be developed for IFRS filers?

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