SEC Filings Checklist For Submitting With High Quality

August 8, 2019by Team IRIS CARBON

It has been a decade since the Securities and Exchange Commission (SEC) mandated public listed companies to file their quarterly and annual reports in Extensible Business Reporting Language (XBRL).  In the initial phase of the mandate, companies did not know how to go about this mandate and used to outsource the XBRL and EDGAR creation to Financial Printers (FP). The landscape has changed a lot since then; SaaS solutions have changed the way financial reporting functions in organizations. Companies have the ability to work on the 10-Qs and 10-Ks with the ability to work on XBRL in-house or leverage their SaaS solution provider for services for XBRL.

Robert Santoski, Founder of recently published the XBRL Quality of Q2 2019, 4,610 commercial taxonomy filings have an average score 88.1. Over the years, the quality of XBRL filings has improved; however there is still a tremendous scope of further improvement. SEC also keeps a watch on filings and issues letters to companies from time to time where they notice corrections needed in the filings and companies then file an amendment implementing the requested correction.

In an attempt to improve the overall quality of XBRL filings, here is a handy checklist that we encourage companies to use for submitting high-quality filings.

Compliance with EDGAR Filer Manual (EFM) Validations:

It’s really important that the XBRL documents comply with the rules described under chapter 6 of the EFM. Whether you are handling the XBRL tagging in-house or have a solution provider handling XBRL tagging, make sure that they comply with these rules.

Create Extensions Only When Necessary:

The SEC allows companies to create an extension concept where there is no appropriate element available in the US-GAAP taxonomy, companies often end up creating extensions where not needed. Below is an example of a company which has reported its Segment note in HTML; however in XBRL they have created random extension elements which do not convey any meaning.

CIK: 0001582054
File: 10-K 2015

Extract of HTML


Extract of XBRL Rendering


Build Calculation Relationships Where Needed:

The EFM rule 6.15.2 explains that a company should create a calculation linkbase where there is a summation relationship. There could be some exceptions to this rule, such as roll forwards and dimensional values where calculation relationships cannot be defined. Below is an example from Balance Sheet where the calculation is missing for ‘Total stockholders’ equity (deficit)’. The total should comprise of Preferred stock + Common stock + Additional paid in capital + Accumulated deficit.

Company Name: BioSig Technologies, Inc.
CIK: 0001530766
File: Q2 2019

Extract from XBRL Rendering


Check the XBRL Rendering:

Checking the rendering of XBRL or iXBRL document is an important aspect to check and verify if all the concepts and values reported in the report are correctly reported in XBRL/iXBRL using SEC’s Previewer.  By way of checking the rendering, one can be sure that there is no information missing to be tagged, the presentation is consistent to the source document, required dates are assigned including dimensions (members), units and scale.

Below is an example where Innovus Pharmaceuticals has reported ‘Gross Profit’ in HTML but has missed to tag this information in XBRL. If the XBRL rendering been checked, this could have been identified easily.

CIK: 0001411879
Filing: 10-K 2018

Extract of HTML


Extract of XBRL Rendering


Run Data Quality Rules (DQC):

Companies are encouraged to follow the XBRL creation best practices while creating and review of XBRL files. For e.g. if the company has reported “Treasury Stock” as a separate line item in the Balance Sheet, the company should use “CommonStockValueOustanding” in place of “CommonStockValue” for Common Stock.

  • Skip use of Subsequent Events [Member] for the facts reported after the period end date.
  • Inappropriate Axes-Member relationships.
  • Reversed calculation relationships.
  • Incorrect calculation weights in Operating Cash Flows.

Follow Industry Standard Practices:

The Data Quality rules introduced by XBRL US have improved the overall quality of filings to a great extent. It’s important to run and resolve all the DQC validations ahead of filing with the SEC. There are many validations rules that are defined by the XBRL US DATA Quality Committee and one of the most common errors that the filers do are reporting negative values in XBRL. The other types of general errors which XBRL filings have are:

We hope this article gives some quick tips that you could use for the upcoming filing season, this would help you with submitting improved quality filings with the SEC.

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