Inline XBRL Tagging Review for Small Filers

Small SEC filers often treat Inline XBRL as a vendor's job that happens after the financial statements are final. That view leaves the tagged data unreviewed, and the tagged data is what investors and the SEC's own tools read. The rules that govern tagging are short and specific. This guide walks through them and sets out a review that a small filer or its CPA firm can run before the filing goes out.

What Inline XBRL is

The SEC describes Inline XBRL as a structured data language in which a filer prepares one document that people can read and software can process, instead of an HTML document plus a separate XBRL exhibit. The SEC adopted the amendments requiring it on a phased-in basis for operating company financial statements on June 28, 2018. Inline XBRL became required for periods ending on or after June 15, 2019 for large accelerated filers, June 15, 2020 for accelerated filers and June 15, 2021 for all other filers, as Rule 405(f) provides for filers using US GAAP. A small filer has therefore been inside the requirement since fiscal periods ending on or after June 15, 2021. Data users can click tagged data points to reach context such as definitions and reporting periods, and EDGAR includes an Inline XBRL viewer that works in a current browser.

Rule 405: the financial statements

Rule 405 of Regulation S-T (17 CFR 232.405) governs the Interactive Data File. For operating companies, the file covers the complete financial statements, including the face statements and the footnotes, schedules required by Article 12, and the Regulation S-K disclosures listed in paragraph (b)(4). The key rules, in the order a reviewer meets them:

Fidelity to the official filing. Each data element must match the related official filing and must not be changed, deleted or summarized. The tagged number is the number in the document.

All required periods. The file may not present only partial face financial statements, such as omitting comparative prior-period information.

Standard tags first. Elements must come from the current EDGAR Filer Manual list. When only the label is wrong, the filer must keep the standard tag and create a special label. A custom element is allowed only when no appropriate standard tag exists. A small filer that creates a custom element for "Revenue from product sales" when a standard revenue element fits has made an error that every reader of the data will see.

Footnotes. Under paragraph (d), each complete footnote, each significant accounting policy and each table within a footnote must be block-text tagged, and each amount within a footnote must be tagged separately. Tagging narrative disclosures separately is at the filer's option.

Schedules. Under paragraph (e), each complete schedule is block-text tagged and each amount within it is tagged separately.

Rule 406: the cover page

Rule 406 (17 CFR 232.406) requires tagging of the cover page information for Forms 10-K, 10-Q, 8-K, 20-F and 40-F. The filer tags all of the information it provides that the cover page requires, in Inline XBRL, following the EDGAR Filer Manual. Cover page errors are the cheapest to prevent, since the facts, such as the registrant name, the period end date and the filer category, are known in advance and sit on one page.

Where the review belongs

The filer's management is responsible for its filing, and the tagging is part of the filing. A CPA firm that audits the company does not become the tagger. The firm's engagement terms decide whether it checks anything beyond the audited statements. Where a firm agrees in writing to perform a tie-out of the tagged file to the audited statements, it should say so in the engagement letter and keep the work in the file. See the engagement letter guide.

A review checklist

1. Tie every tagged face amount to the statements. Print the tagged values from the viewer and compare them with the audited statements line by line. Because Rule 405 forbids changing or summarizing, a difference is an error.
2. Check signs and scale. Check that expenses and negative values carry the intended sign and that the scaling matches the presentation in the document, for example thousands against units.
3. Check periods and contexts. Each value should carry the right period or instant. A prior-year balance tagged to the current year is a common slip.
4. Review every custom element. For each one, record the standard element considered and why it did not fit. If no record exists, assume a standard element fits and look again.
5. Check note tagging. Each note, each policy and each table has a block tag, and every amount inside a note is detail tagged.
6. Check the cover page. The values agree with the document's cover and with prior filings where the facts are unchanged.
7. Run the validation and read the viewer. The SEC points filers to its XBRL validation and rendering resources, and the viewer shows what a reader sees.

Worked example

Cedar Park Foods, Inc. has $48.2 million of total assets and files its 10-K with a debt note.

The note includes a table of maturities for a term loan: $1.2 million in each of the next four years and a $6.8 million balloon in the fifth year. Under paragraph (d), the whole note is block-text tagged, the maturities table is block-text tagged as a table within the note, and each of the five amounts is tagged separately, using the standard maturity elements for each year. The vendor's draft instead created a custom element called "Balloon payment due" for the $6.8 million.

The reviewer asks whether a standard element for repayments in the fifth year exists, finds one that fits, replaces the custom element and records the change. The face balance sheet shows long-term debt of $10.4 million net of the current portion, and the reviewer ties the total of the maturities ($11.6 million) less the $1.2 million current portion to it. The tag set and the statements now agree.

What a small filer should settle early

• Who prepares the tagging, who reviews it and who signs off, in writing.
• A calendar that leaves time between the final statements and the filing, since a late adjustment to a note forces retagging.
• A tagging file kept with the filing, including the list of custom elements and the standard elements rejected for each.

Related reading

For how this fits the filing calendar, see the SEC forms audit touchpoints page and the Form 10-K disclosure checklist.

Where CORAA fits

CORAA prepares ready-to-review audit files for US CPA firms, including the tie-out schedules that compare presented amounts with the underlying statements. The firm keeps the client, the review and the signature. See /us.

Sources

• Legal Information Institute, 17 CFR 232.405, Interactive Data File submissions: https://www.law.cornell.edu/cfr/text/17/232.405
• Legal Information Institute, 17 CFR 232.406, Cover page XBRL data tagging: https://www.law.cornell.edu/cfr/text/17/232.406
• SEC, Inline XBRL: https://www.sec.gov/structureddata/osd-inline-xbrl.html

AU-C references are to AICPA Professional Standards, paraphrased here; read the standard itself before relying on a requirement. This page is guidance, not professional advice. Report an error