Archive for the ‘SEC News’ Category

Hackers Breached the SEC and Profited Off Pre-Public Information

Friday, September 22nd, 2017

The SEC has reported that the EDGAR system was hacked by nefarious actors in 2016, and they were able to access companies’ financial disclosures before they were released publicly.  Although the SEC was able to patch the breach in their security systems and protocols fairly quickly, Chairman Jay Clayton admitted “that some may have used it to make illegal profits.”

You can read more here, here, and here.

Coming on the heels of the massive data breach at Equifax earlier this month, this news might rattle the cages of security-conscious public companies.  In his statement on the incident, Clayton also made clear that the SEC is “continuing to investigate the breach and its possible consequences,” and it seems likely that the SEC will be making inquiries regarding the path that pre-public financial information takes as it wends from the companies themselves, through the filing agents, and finally to the SEC.

As Reuters states in their article on the hack, “Cyber criminals have targeted financial information hubs before — the Hong Kong stock exchange and the Nasdaq stock exchange in New York were targeted by hackers in 2011.”  Hackers and cyber thieves see considerable money to be made accessing pre-public information, and they have proven as much by targeting stock exchanges and now even the SEC.

This is why RDG has always made the security of our clients’ pre-public information our highest priority.

RDG is proud of the fact that we do not send any of our clients’ documents overseas to be converted.  We also take pride in the fact that all our staff is US-based, as this is a central aspect of our commitment to both data security and customer service.  Another important part of our commitment to both data security and quality is the fact that all our EDGAR conversion and XBRL tagging software is proprietary.  We have built all our own tools for maximum security and quality, and we maintain all our tools and data on our own SSAE16 certified secure servers, which are located in a world-class co-location facility with redundant storage capacity, multiple back-ups for power, dual and backup internet connections, and full hardware redundancy.

We encourage public companies to ask their SEC filing agent some very important questions:

  • Do you send any part of my documents to a 3rd party for EDGAR conversion or XBRL tagging?
  • Do you send any part of my documents overseas for EDGAR conversion or XBRL tagging?
  • Are all of your employees US-based?
  • What are your security protocols and procedures?

Please contact us if you have any questions about the hack of the SEC or about RDG’s service.

We will be looking forward to hearing from you. Get in touch with us anytime!

Stewart Walker

415.643.6017

IFRS Companies to Begin Filing XBRL in 2018

Tuesday, September 12th, 2017

On March 1, 2017 the SEC posted the IFRS Taxonomy.  A full eight years after the start of the XBRL mandate for US GAAP companies, the SEC has finally announced the mandate for IFRS companies to submit XBRL files for 20-F and 40-F filings.

IFRS filers will have to begin submitting XBRL exhibits with fiscal periods ending on or after December 15, 2017.

How does this impact SEC Foreign Private Issuers (FPI) that use IFRS?

SEC Forms 20-F and 40-F (and some 6-Ks*) will require XBRL tags to be applied to each number in the Base Financials, including all of the facts in the Notes to the Financial Statements.

It cannot be denied that this will require some additional work for IFRS companies’ financial reporting teams.  However, there is value in IFRS companies beginning to file XBRL structured data and adding their data to the currently existing wealth of structured data that has been submitted to the SEC by US GAAP companies since 2009.  XBRL structured data is computer-readable and enhances the value, access, and usability of the financial information that SEC issuers file.

RDG filings is one of the leading providers of full-service XBRL tagging solutions in the country, and we create the highest quality XBRL data available.  We have been filing XBRL under the US GAAP taxonomy since the beginning of the mandate, and we are very excited that the IFRS taxonomy is finally going to be made live.  As one of the founding members of the XBRL US Center for Data Quality, RDG has the experience and the expertise to provide IFRS companies with excellent customer service and the highest quality XBRL data.

RDG has always made a strong commitment to creating the highest quality, most useable XBRL data possible, and we employ Certified Public Accountants and experienced auditing/accounting professionals to provide personal service to all of our clients.  As a result of this commitment, the XBRL data that RDG builds has been ranked by a leading independent expert as being filed error free 99% of the time.

Don’t Wait

Don’t wait until you are drafting your 20-F or your 40-F to begin preparing for the XBRL tagging process.  The template creation and set up process is not insignificant, and it pays to begin the process early.  Please contact us to ask any questions and get a realistic and transparent flat-rate quote.  Some providers may try to overcharge you for this service, so it is very much worth your while to take a few moments to do your due diligence.

(*Unless an issuer has a Form F-3 shelf registration that it wants to keep current, there is no requirement for quarterly or semiannual financial statements or earnings press releases that are submitted to the SEC on Form 6 K to include the information in XBRL format.)

We will be looking forward to hearing from you. Get in touch with us anytime!

Stewart Walker

415.643.6017

New Rule from the SEC – Exhibit Indexes Must Be Hyperlinked

Wednesday, March 8th, 2017

Everyone loves new rules from the SEC, right?  Well, the SEC is happy to oblige.  On March 1st, the SEC released new rules about hyperlinking the exhibit indexes in many SEC Filings.  The Final Rule 33-10322 is called “Exhibit Hyperlinks and HTML Format,” and if you’d like to read the full 47 pages, you can find them here. However, if you’d prefer a brief summary, you can find one below.

The Gist

All documents (even those incorporated by reference) listed in the Exhibit Index must include a hyperlink that will link directly to the exhibit itself.

The rule also includes a related requirement, which will impact only a small number of companies.  The SEC will be no longer accept filings (that include an exhibit index) in ASCII.  Hyperlinks are not possible in ASCII, so companies will be required to submit all impacted filings in HTML.

When Does it Take Effect?

September 1, 2017

The only exception to this start date will be for Smaller Reporting Companies and Non-Accelerated Filers that currently file in ASCII.  Those companies will have until September 1, 2018 to comply.

What’s the Point?

To improve investors’ access to information.

What Form Types Will this Affect?

10-K, 10-Q, 8-K, 20-F, S-1, S-3, S-4, S-8, S-11, SF-1, SF-3, F-1, F-3, F-4, 10, 10-D, F-10

Related amendments (e.g., S-1/A, 10-K/A, 10-Q/A, 8-K/A, etc.) will also be affected.

Are There any Exceptions?

Exhibits that have not been filed electronically (i.e., paper filings) are excluded because there is nothing to which to link.

XBRL exhibits are also excluded from the requirement because a hyperlink would lead to an XML file, which would not be helpful to investors.

What Happens if a Hyperlink on a Filed Document is Inaccurate or Non-functioning?

In the case of a Registration Statement that is not yet effective:  The company must file an amendment with the correct link.

In the case of a Registration Statement that has become effective:  The company must correct the link in their next filing that contains an Exhibit Index.  Alternatively, the company could file (but is not required to file) a Post-Effective Amendment to the Registration Statement.

In the case of a 10-Q, 10-K, or 8-K:  The company must correct the link in their next filing that contains an Exhibit Index.  An amended filing is not required.

Here is an Image to Help Clarify

The Exhibit in the blue square is incorporated by reference, so this will need a hyperlink that leads to the URL for that previous 8-K filing on the EDGAR system.

The Exhibits in the red square are being filed or furnished along with the filing in question, so they will need to be hyperlinked to the exhibits themselves.

The XBRL Exhibits in the green box will not need to be hyperlinked.

Exhibit Index Hyperlinks_boxes

XBRL FAQ: What is Bleed-Through?

Tuesday, May 3rd, 2016

Bleed-through is a common phenomenon on the SEC’s XBRL Viewer, as well as on RDG’s own Thunderdome® Viewer (which was designed to resemble the SEC’s Viewer, but with more information and features).  To explain it in a nutshell: Bleed-through is a natural result of how the SEC’s Viewer interprets XBRL code.  It is both normal and expected by the SEC.

Below is a common example of bleed-through.  The first table presented is directly from the company’s EDGAR document (it’s from a disclosure table in Note 1). The second is the same table, but how it is presented in the SEC’s XBRL Viewer.

Bleed Through Table 1

Bleed Through Table 2

 

The difference in the XBRL Viewer is the addition of the first line, “Net trade income (loss).”  Plainly those “Net trade income (loss)” numbers do not ‘belong’ in the Note 1 disclosure table.

So, why are they there?  Well, the short-answer is that due to the nature of XBRL and the function of the SEC’s XBRL Viewer, the numbers are “bleeding through” from the Operations Statement.  You can see that table from the EDGAR document here:

 

Bleed Through Table 3

 

The longer answer is that both the “Net trade income (loss)” line in the disclosures table in Note 1 and the “Net trade income (loss)” line in the Operations Statement are tagged with the same primary concept (us-gaap_NetIncomeLoss).  However, only the occurrence of that concept in the Note 1 table has had a dimension applied to it.

This bleed-through issue is not symptomatic of a problem with the tagging.  This document is tagged properly and it is entirely in line with the SEC XBRL requirements and FASB best practices.  The bleed-through is a direct result of the SEC’s XBRL Viewer, and to-date, the SEC has taken no steps to correct it.

Here’s what is happening on the SEC’s Viewer:  When the Viewer displays any fact that has been tagged with a dimension, the Viewer will also grab and display all other facts throughout the document that share the same tag but that do not include a dimension. In this case, the “Net trade income (loss)” line in the Operations Statement is tagged with the same primary concept as it is in the Note 1 disclosure table, but in the Note 1 table that concept is also dimensionalized.  As a result the SEC Viewer presents the “Net trade income (loss)” line from the Operations Statement in the Note 1 table.

This is classic bleed-through, and it has been causing headaches for people reviewing XBRL tagging since the inception of the mandate.

So, can it be fixed?  Firstly, it is important to understand that the SEC does not want filers adjusting their tagging simply to make the presentation in the XBRL Viewer look better. The reality of XBRL is that it is not intended for human consumption.  It is designed to make Financial Statements & Notes machine-readable.  When XBRL is tagged properly – each fact stands alone, free of the original document, getting context only from its own tag, date, and any dimensions.  From a “machine-readable” point of view, it does not matter where in the document the fact is located, so long as it is tagged correctly.  This is why the SEC did not build the Viewer to present the XBRL in an entirely human-readable format.  It is also why the SEC expects to see bleed-through, and does not consider it an issue.

The actual issue is when some filers attempt to “fix” bleed-through by adjusting the tagging with the presentation in mind.  We do not recommend these sorts of “presentation fixes” because they often contradict SEC guidelines and FASB best practice.  So in the case above – as with almost all bleed-through cases – we simply leave it be.  It is tagged properly, and it is machine-readable.  The SEC wants it tagged this way, and they expect the bleed-through that results.

The SEC’s Updated XBRL Viewer – Improvements are Accompanied by Some Bugs

Tuesday, August 11th, 2015

The SEC has updated their XBRL viewer, and in many ways the changes are improvements.  The new XBRL viewer (3.2.0.727) was deployed this summer, replacing the previous version (2.4.1.9).  Additionally, the update was a necessary step with regard to future enhancements the SEC will be making to the viewer.  However, in the short term, this update includes some bugs that we wanted to alert you to. This post will describe the changes the SEC made to their viewer and explain some of the bugs that have come from this update.  We invite you to contact us if you have any questions or if you’d like more specific information.

To put the viewer update in context, it’s important to know that the previous SEC viewer originally was created using the .NET framework over 6 years ago.  However, the SEC’s validation engine (Arelle) was built using a coding framework called Python.  The different programming languages made integrating the two platforms difficult.  Additionally, the .NET framework caused some problems running the renderer on non-Windows machines.

To address these issues, the SEC has built the new viewer using the Python platform so that integration with the Arelle validator is now seamless.  While this does not impact the end user to any significant degree, it helps developers and the SEC a great deal.

Now we will address the bugs that have popped up as a result of this viewer update.

Uncategorized Items

“Uncategorized Facts” are typically only presented as such if the facts are not assigned a specific presentation. The updated viewer is erroneously identifying certain facts as “uncategorized” even when they have been assigned a presentation.  This issue is most commonly tied to US-GAAP concepts that appear on both the Income and Cash Flows Statements.  Apparently, the viewer will place shared facts from the Cash Flows in the “uncategorized” section and ‘forgets’ that those facts were already used on the Income Statement.  This means the viewer did not need to display those facts as uncategorized because they were indeed displayed on the Income Statement.  The new viewer also fails to distinguish between actual uncategorized facts and facts the viewer is choosing not to display.

The SEC is aware of this bug, and we believe it will be addressed with their next Viewer update, but they have not yet provided a timeframe for the correction.

Total Columns

Where the previous viewer displayed a “Total” column only when the presentation was an equity table, the update has caused the viewer to display a “Total” column whenever there are multiple contexts that end on the same date in the same presentation.  This change does allows for tables other than the equity table to render with a “Total” column, but it leads to certain other issues when viewing reports (e.g.: The Document and Entity Information can now render with a “Total” column, or Operations tables may render with two “Total” columns).

We do not yet know if the SEC considers this a bug, or if they will address it with their next Viewer update.

 

If you have any questions or would like any further detail, please feel free to contact us anytime.

Stewart Walker – SVP, Director of Sales

(415) 643-6017

RDG Filings is Honored to be a Founding Member of the XBRL US Center for Data Quality

Friday, June 26th, 2015

Since the inception of the XBRL mandate, RDG has strived to set the standard for XBRL data quality, and we are proud to be among the leaders in the XBRL community.  That is why—along with Merrill, RR Donnelley, Vintage-a division of PR Newswire, and Workiva—RDG Filings is delighted to be a Founding Member of the XBRL US Center for Data Quality.

The formation of the Center for Data Quality—announced yesterday—is the culmination of months of work by the XBRL US, the Founding Members, and many more people to whom we are grateful.

The Founding Members provide XBRL tagging services and software to a majority of public companies, and they have come together in shared commitment to the importance of improving the quality of the XBRL data that is filed with the SEC.

The advent of the XBRL mandate has been a tremendous improvement to the existing HTML/EDGAR format, and XBRL has become the worldwide standard for the reporting and analysis of financial information.  However, the full benefits and potential of XBRL have not yet been realized because much of the XBRL currently filed with the SEC contains errors and inconsistencies.  As a direct result of valid concerns about its accuracy and reliability, investors and analysts have been reluctant to utilize the available XBRL data.

The XBRL US Center for Data Quality believes that the errors and inconsistencies currently restraining XBRL’s true potential are primarily the result of:

  • Absence of unambiguous guidance for using the US GAAP taxonomy
  • Lack of corporate awareness of errors in their filings

Investors, analysts, the SEC, and the market in general will benefit greatly from the utilization of XBRL data, and RDG Filings is happy to join forces with other leaders in the XBRL community to ensure that the quality and utility of the data improves dramatically.  The Data Quality Committee will develop:

  • Guidance to provide for uniform, consistent tagging of financial data and to clarify those specific circumstances where custom tags are appropriate
  • Automated validation rules to detect input errors and verify compliance with the Committee’s guidance

RDG Filings agrees with Barry Melancon, CEO of the American Institute of CPAs, and Chair of the XBRL US Board of Directors, when he says that in order to “realize the full economic benefit of XBRL, investors and other consumers must have access to accurate and reliable XBRL data.”  Melancon applauded the formation of the Center for Data Quality as an “industry-funded initiative” that will “make it substantially easier for companies to create consistent, good quality financial statements in XBRL format.”

RDG Filings—along with the other Founding Members of the XBRL US Center for Data Quality—has always made a commitment to creating quality code that is of the greatest value and utility for analysts and investors.  There is a “clear demand for timely, structured, machine-readable data,” and we are excited about the work the Center will do to fulfill the potential that XBRL holds for public companies and the investment community.

Feel free to contact me any time.

Stewart Walker – SVP, Director of Sales

(415) 643-6017

XBRL Is Back In The Crosshairs — Rep. Hurt Is At It Again

Monday, April 27th, 2015

Despite repeated legislative defeats, Representative Hurt from Virginia’s 5th district has re-introduced legislation to create a two-tier caste system among publicly traded companies.

According to this most recent legislation (which is identical to language that failed to pass in 2014), some companies would continue reporting their quarterly and annual financial information in the XBRL format, as they have since 2011.  Other companies, however, would suddenly be exempt from this requirement, and they would revert back to a reporting standard that was cutting edge in 1996.

As this new legislation—HR 1965—is identical to HR 4164 which was introduced in 2014, you can read our post regarding that legislation for more detail.  However, the main points are the same:

If this poorly considered bill manages to gain passage—either on its own or as an amendment to a larger bill—the partial elimination of the XBRL filing requirement would be deeply damaging to the national standards of public disclosure and financial reporting.  Additionally, the SEC’s ability to discover investor fraud would be unnecessarily and dramatically hamstrung by this bill.  Lastly, and rather ironically even by congressional standards, this bill will be considerably detrimental to the same companies that it is meant to help, because exempting small companies from XBRL reporting will create a permanent underclass of less visible, and undiscoverable investment opportunities.

It’s a bad bill with dubious benefits and destructive consequences.

Feel free to contact me any time.

Stewart Walker – SVP, Director of Sales

415.643.6017

Once Again, The SEC Bolsters XBRL

Monday, February 23rd, 2015

Even as the misguided efforts to minimize the reach of XBRL reporting continue in Congress, the SEC has increasingly endorsed and strengthened its commitment to this important advancement in financial disclosure and data availability.  Recently, the SEC has taken aggressive steps to promote and protect XBRL data.

On February 19th, 2015, SEC Commissioner Luis Aguilar endorsed the Investor Advisory Committee’s (IAC) 2013 recommendation to have issuers provide information in an interactive data format.  Speaking at the SEC Speaks conference, Commissioner Aguilar promoted the SEC’s adoption of machine-readable XBRL format and promoted the notion that it would be a great benefit to investors Proxy information were also presented in XBRL.  Commissioner Aguilar said: “For instance, it has been suggested that the better use of 21st century technology in the proxy process may facilitate how shareholders can more effectively receive and understand how their companies are performing, and to better put that performance into perspective.  Indeed, it’s only logical to expect that better informed investors would likely participate in greater numbers.”

Aguilar went on to endorse the IAC’s recommendation that the SEC “immediately prioritize tagging important information with respect to various corporate governance issues, including portions of the proxy statement that relate to executive compensation and matters voted upon by shareholders.”  His support is supported by the fact that “tagging the voting data and results contained in certain forms could result in more informed voting and investment decisions, and would facilitate comparisons among public companies.”

At the same SEC Speaks conference, the SEC’s Investor Advocate, Rick Fleming, criticized the regressive XBRL proposal put forward by Representative Robert Hurt.

Representative Hurt’s proposal would create an exemption from the XBRL filing requirements for certain small companies, which would exclude more than 60 percent of all public companies.  Mr. Fleming said that if this were signed into law, it “would seriously impede the ability of the SEC to bring disclosure into the 21st Century.”  He continued, “If Congressional action is needed, it should be used to press the SEC to move forward in its efforts to make disclosure more accessible and useful for investors.”

The SEC has only increased its commitment to the XBRL reporting requirement, and they have also massively increased its use of the data.  Investment decisions by analysts and enforcement decisions by the SEC will increasingly be driven by the information provided in the XBRL data, and for that reason RDG has, since its very inception, been committed to having the best people creating the highest quality code.

XBRL is the future of financial disclosure, and RDG can help public companies create excellent and usable data.  Please contact us to learn more about our Full Service Tagging Services and our XBRL Quality Assurance Services.

Feel free to contact me any time.

Stewart Walker – SVP, Director of Sales

415.643.6017

The SEC Expands Use of XBRL and Validates RDG’s Commitment to Excellence

Wednesday, January 21st, 2015

On December 30th, the SEC significantly expanded its use of the XBRL data provided by public companies with their 10-Q and 10-K filings.  It launched a new program that is designed to “facilitate investor analysis and comparisons of public company financial statement data” by consolidating the “data that companies provide in structured formats” into data sets that will be “posted for bulk downloads on the SEC’s website.”  The program will begin using only the information provided in the base financials, but it will soon include data from the footnotes as well.  The purpose of this program is to promote and expedite the use of XBRL data by investors and academics.

We are very happy that the SEC has begun using XBRL in this way.  This step begins to validate the commitment we have long made to creating top-quality code that exceeds the standard of SEC compliance and is entirely useable for analysts and investors.

We are gratified the SEC has taken these steps, because the XBRL code we submit on behalf of our clients is excellent, compliant, and useable.

In the data sets the SEC has released, there will be a lot of code that was built by providers who outsource the XBRL overseas, or who have otherwise made a lesser commitment to quality XBRL data.  Additionally, there will be a fair amount of code built by the reporting teams at individual companies who have taken the responsibility of properly structuring XBRL in-house.  When the XBRL is poorly built, or created by people who are not CPAs and experts, there is a risk that the information made available by the SEC in these data sets will be an inaccurate reflection of the companies’ financial information.

Investment decisions by analysts and enforcement decisions by the SEC will be driven by the code in the XBRL data, and for that reason RDG has–since its very inception–been committed to having the best people creating the highest quality code.

XBRL is the future of financial disclosure, and RDG can help public companies create excellent and usable data.  Please contact us to learn more about our Full Service Tagging Services and our XBRL Quality Assurance Services.

Feel free to contact me any time.

Stewart Walker – SVP, Director of Sales

415.643.6017

The SEC Massively Expands Its Use Of XBRL Data

Friday, January 9th, 2015

On December 30th, the SEC massively expanded its use of the XBRL data provided by public companies with their 10-Q and 10-K filings.  The SEC announced and launched a pilot program designed to “facilitate investor analysis and comparisons of public company financial statement data” by consolidating the “data that companies provide in structured formats” into data sets that will be “posted for bulk downloads on the SEC’s website.”  The program will begin using only the information provided in the base financials, but it will soon include data from the footnotes as well.  The purpose of this program is to promote and expedite the use of XBRL data by investors and academics.

This program is the most significant expansion of the availability public companies’ financial disclosures since the advent of the EDGAR system in the 1990’s.  For the first time, every public company’s base financials will be available in one data set, which means that investors and academics will no longer have to manually cobble together usable data from the information available in the archaic and individual EDGAR filings.

This announcement made on the penultimate day of 2014 capped off what was a big year for XBRL.  This announcement put an exclamation point on a year in which the SEC dramatically increased both its use of XBRL and the attention it pays to structured data.  Earlier in the year, the SEC conducted a staff assessment of the use of custom tags.  In 2014, the SEC also began sending ‘Dear CFO’ letters to companies regarding required calculations in their XBRL exhibits.

With this move, the SEC has positively affirmed that XBRL is the present and the future of financial reporting.  They have also sent an unmistakable message that public companies should take the necessary steps to ensure their XBRL data is well structured and properly usable.  These public data sets are based on the XBRL only and are not verified against the content of the EDGAR document, so poorly constructed XBRL data will not provide an accurate depiction of a company’s financial disclosures.  It takes an expert to create quality, compliant, and truly usable XBRL data.

XBRL is the future of financial disclosure, and RDG can help public companies create excellent and usable data.  Please contact us to learn more about our Full Service Tagging Services and our XBRL Quality Assurance Services.

Feel free to contact me any time.

Stewart Walker – SVP, Director of Sales

415.643.6017