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Planning an Orderly Transition to the 2011 US GAAP Taxonomy

March 30, 2011

What taxonomy should SEC filers be using this year? A new US GAAP Taxonomy was approved by the SEC on February 28, 2011, but when are filers to adopt it and what must be done to ensure an orderly transition?

US GAAP Taxonomies were developed and maintained by XBRL US until early 2010. In February 2010, the Financial Accounting Foundation and the Financial Accounting Standards Board (together the “FASB”) assumed responsibility for maintaining and updating the US GAAP Taxonomy (“UGT”). Typically, a new UGT is released once each year. However, with the ownership of the UGT transitioning from XBRL US to the FASB, a 2010 US GAAP Taxonomy was not released. Since assuming responsibility for the UGT, the FASB has made significant improvements in the taxonomy. The improvements include:

  • Updates for the accounting standards that have been issued since the 2009 UGT was published
  • Expanded disclosure for previous omissions, including common reporting practices observed in XBRL filings over the last couple of years
  • Correction of errors and rationalization of duplicated concepts
  • Updated architectural modeling of existing taxonomy structures (dimensional tables for example).

Modifications to the US GAAP Taxonomy were made with the intent of minimizing the impact to the instance documents of filers who have used the 2009 UGT while also making the necessary changes to improve the UGT. A new element label type has been added, the New Concept label type, to indicate where new taxonomy elements have been added. The new taxonomy elements have a New Concept label of “2011 New Element”.

Summary of Changes to the UGT

Many changes were made to US GAAP during the last two years. Naturally, changes in US GAAP since the 2009 taxonomy was released have been incorporated into the new taxonomy. Where there was not a significant change in the context of an element, the element name remains the same to facilitate migration to the 2011 UGT. For elements with significant definitional changes, new UGT elements replaced the old UGT elements or new elements were added to provide alternative elements for filers to use. Where UGT elements have been replaced, the old UGT elements have been deprecated (a way of retiring the element from use but retaining it’s history in the UGT). In addition, several new presentation groups have been added to the UGT including:

  • 124200 – Statement of Income, Additional Statement of Income Elements
  • 152201 – Statement of Cash Flows, Additional Cash Flow Elements
  • 152205 – Statement of Cash Flows, Supplemental Disclosures
  • 985000 – Other Industries
  • 195000 – Comprehensive Text Block List

One of the more notable changes in the 2011 UGT is the Comprehensive Text Block List (Presentation Group 195000). In the previous taxonomy text block elements for XBRL mappings at level 1 (footnote text blocks), level 2 (significant accounting policy text blocks) and level 3 (table text blocks) were labeled in the same way. In general, they all had a suffix of “[Text Block]”. In the new UGT level 1 text block elements have the suffix “[Text Block]”, level 2 text block elements have the suffix “[Policy Text Block]” and level 3 text block elements have the suffix “[Table Text Block]”. Additionally, presentation groups 795000–Statement of Cash Flows Supplemental Disclosures and 993550–Form SH Investments Sold Not yet Purchased have been removed from the 2011 UGT.

Many dimensional elements (e.g. Axes, Domains and Members) within the 2011 UGT have been remodeled and rationalized to more accurately represent the dimensional structure of US GAAP disclosures in the financial statements and footnotes of SEC registrants. Also duplicate and redundant dimensions have been rationalized and new dimensions added to provide better extension taxonomy modeling.

Removal of Non-GAAP Elements

The 2009 UGT consisted of US GAAP elements and non-GAAP elements. Examples of Non-GAAP elements that were previously included in the taxonomy include SIC elements, entity elements and document information elements. The following non-GAAP groups have been removed from the 2011 UGT:

  • 994400 – Document – SEC Certification
  • 994600 – Document – Management Report
  • 994800 – Document – Management Discussion and Analysis
  • 995000 – Document – Accountants Report
  • 995200 – Document – Document Information
  • 995400 – Document – Entity Information
  • 995410 – Document – Country Code
  • 995420 – Document – State or Province
  • 995430 – Document – Currency
  • 995440 – Document – Exchange
  • 995450 – Document – SIC
  • 995460 – Document – NAICS
  • 995470 – Document – Investment

Maintaining non-GAAP taxonomy groups will now be the responsibility of the SEC. Non-GAAP taxonomy elements will be maintained and available for use on the SEC’s website. To use both US GAAP and non-GAAP taxonomy components, filers will need to import each taxonomy group into their XBRL software tools. Both US GAAP and non-GAAP taxonomies are available on the SEC’s website at http://www.sec.gov/info/edgar/edgartaxonomies.shtml.

When Are Companies to Adopt the New UGT and What Factors Should Be Considered?

The SEC strongly encourages companies to migrate to the 2011 Taxonomy. The new Taxonomy is a significant improvement over the 2009 Taxonomy. Things to consider when migrating from the 2009 UGT to the 2011 UGT include:

  • Companies should make an orderly transition from the 2009 Taxonomy to the 2011 Taxonomy
  • Companies who have already mapped their data to the 2009 Taxonomy are permitted to continue using the 2009 Taxonomy for their filings
  • The SEC will remove the 2009 Taxonomy from the approved taxonomy list at some point, but filers will have plenty of notice before they do.
  • It is likely that filers who migrate to the new taxonomy will be able to reduce the number of extension they use in their taxonomies.

Some filers may believe that that they must begin using the new Taxonomy for periods ended after July 15, 2011. That language was included on the SEC’s XBRL Taxonomy Website, but it has been removed. As of March 30, 2011 the SEC’s website contains the following instructions about the 2011 US GAAP taxonomy:

“The SEC staff strongly encourages companies to use the most recent version of the US GAAP taxonomy release for their Interactive Data submissions to take advantage of the most up to date tags related to new accounting standards and other improvements. However, due to the timing of the release of the US GAAP 2011 taxonomy in conjunction with the phase-in of the Rule, companies will be permitted to continue to use the US GAAP 2009 taxonomy.”

Conclusion

Many positive improvements are included in the 2011 US GAAP taxonomy. New accounting standards have been incorporated, disclosures have been improved, errors and duplications have been rationalized and the dimensional structure of the taxonomy has been enhanced. Companies should begin planning and implementing an orderly migration to the 2011 UGT to take advantage of its superior ability to eliminate taxonomy extensions, improve extension taxonomy structures and normalize comparability of new US GAAP disclosures.

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