PwC supports the AICPA Assurance Services Executive Committee's decision to develop a set of principles and criteria to evaluate information formatted in XBRL. PwC recommends, however, before finalizing the principles and criteria, the AICPA discuss with the SEC whether the SEC would accept examination reports using the principles and criteria given that they are not meant to be the criteria for evaluating compliance with SEC rules, and also evaluate whether additional feedback from preparers and users should be obtained. PwC also suggested some changes to the principles and criteria.
August 10, 2011
Ms. Ami Beers
Manager, Business Reporting, Assurance and Advisory Services
American Institute of Certified Public Accountants
1211 Avenue of the Americas
New York, NY 10036-8775
Re:Proposed Principles and Criteria for XBRL-Formatted Information
Dear Ms. Beers:
PricewaterhouseCoopers appreciates the opportunity to comment on the AICPA's Proposed Principles and Criteria for XBRL-Formatted Information(the "Exposure Draft"). We support the AICPA Assurance Services Executive Committee decision to develop a set of principles and criteria to evaluate information formatted in Extensible Business Reporting Language (XBRL). We believe the Exposure Draft is consistent with that objective and will assist in improving the quality of XBRL-formatted information.
Our comments are organized into the following sections:
Appendix B of the Exposure Draft references the Securities and Exchange Commission (the "SEC") final rule, Interactive Data to Improve Financial Reporting,and aligns certain SEC requirements for XBRL exhibits submitted to the SEC with related XBRL principles and criteria developed by the AICPA. Appendix B also acknowledges that the XBRL principles and criteria developed by the AICPA are not meant to be the criteria for evaluating compliance with the SEC rules and regulations. The Exposure Draft also discusses that companies may engage a CPA to provide attestation services related to their XBRL-formatted information, including examination engagements. As a result, companies may request an independent accountant to perform an examination engagement related to their XBRL SEC exhibit. We question whether the SEC would accept reporting that explicitly states the criteria are not meant to be the criteria for evaluating compliance with the SEC rules and regulations - a point that we anticipate would be included in an independent accountant's examination report based on the XBRL principles and criteria reflected in the Exposure Draft. If the SEC would not accept reports based on the principles and criteria reflected in the Exposure Draft, we believe the utility of the proposed guidance would be significantly reduced. Accordingly, we believe the AICPA should discuss this point with the SEC before finalizing the principles and criteria.
Paragraph 2 of the Background and Applicability section of the Exposure Draft states that the principles and criteria focus on areas that require both judgment by management in preparing the instance document and related files and that would likely have a significant effect on investor decisions. To date the AICPA has received eight comment letters most of which have come from CPAs and audit firms. We recommend that the AICPA evaluate whether enough feedback has been received from preparers and users to determine whether the principles and criteria appropriately reflect the XBRL requirements most important to users. If not, then the AICPA should explore other ways to obtain this feedback before finalizing the principles and criteria.
Responses to Requested Feedback
We have provided feedback related to certain questions included in the Exposure Draft.
Q. Are the principles listed appropriate for XBRL files and are they complete (are any missing)?
A. We do believe the proposed principles listed are appropriate. However, there are two additional principles we believe should be further considered. Consistency (between periods) and Relevance.
The first, Consistency (between periods), has aspects laid out in the EDGAR Filer Manual (EFM), such as EFM 6.6.26, 6.6.27 and 6.8.10 but is not currently required by the SEC. The latter, Relevance, may become more important as instances are created directly from company applications and are no longer mirroring an existing source document. We encourage the AICPA to consider ways to collaborate with the SEC and others to evaluate whether a greater focus on these topics should be a requirement, and if so, then the principles and criteria should be updated accordingly.
Q. Are the criteria listed appropriate and complete for each principle?
A. We believe the proposed criteria listed are generally appropriate and complete. However, we believe that some of the criteria can be stated with more clarity or additional detail.
Item 17 under Accuracy states: "Labels are consistent with the captions in the source information." While generally true, it could be stated more clearly. We believe that providing additional clarification to this criterion may make it more technically correct and easier to understand and implement. In particular, we believe providing further explanation of what is meant by "consistency" can help compensate for situations that might make the statement seem unclear. For example, in certain situations the EFM requirement may be for the printed captions to be identical to the source document but in other situations there are allowable variances. We believe in the former situation, the criterion as presently worded may allow for the information to not be identical as one might interpret this to be "consistent." We suggest adding a footnote to Item 17, stating, "By consistent, we mean the same as the printed captions in the source document, where that is required, or within the scope of variances otherwise permitted."
Item 22 under Structure states: "New table structures are only created when no suitable table structure exists in the applicable standard taxonomy." Registrants must create linkbases (and where appropriate, table structures in the definition linkbase) in all situations, including when suitable table structures already exist in the applicable taxonomy. As a result, when a table structure already exists in the applicable taxonomy, the SEC suggests the registrant create a table structure that mirrors the table structure in the applicable taxonomy. As companies under the SEC mandate must create all table structures, the opportunity for enhanced clarity exists by removing the word "created" to avoid confusion. We believe this criterion would be more technically correct if revised to read, "The table structures in the company's definition linkbase should mirror those in the standard taxonomy unless no suitable table structure already exists."
Item 24 under Structure states: "The names of extension elements (excluding domain members) contain no prohibited information." This criterion should not exclude domain members from the type of elements that should not have prohibited information. The information that is prohibited may differ by type of element, but no extension element should have prohibited content in the name. For example, the EFM prohibits names longer than 200 characters and indicates that "a", "an," and, "the" should not be included in element names. We believe it is more technically correct and clearer to simply state, "The names of extension elements contain no prohibited information."
Q. Do you agree with the categorization of the criteria related to each principle?
A. We believe the categorization of the criteria to each principle is appropriate.
Q. Do you agree that the criteria are presented in the proper order? Is this important?
A. We believe the order is suitable. There are many potential ways to order the criteria, particularly more closely oriented with the typical preparation process, presentation orientation, or more suitable for review. However, the printed order does not have to coincide with any execution order.
Q. Do you believe the following criterion should be added?
— To the extent that the concept of “unaudited” is reflected in the source document, it also is reflected in the instance document and related files.
A. We do not believe that "unaudited" should be reflected in the instance document and related files. At the present time, there is no required auditor involvement related to the XBRL instance documents. Seeking to identify certain information as "unaudited" raises the expectation that other information is, in fact, audited. As a result, we are concerned that if "unaudited" is reflected in the instance document and related files, an expectation gap may be created that the amounts in the individual tags will be viewed as audited numbers and the tags and related files were subject to audit procedures.
Q. Do you believe that XBRL principles and criteria could be applied to applications of inline XBRL (iXBRL)?
A. The SEC has indicated its ongoing consideration of iXBRL, in which the information necessary to create XBRL instance documents is embedded within HTML-formatted reports. We therefore encourage the Task Force to consider the relevance of iXBRL in its future consideration of the principles and criteria and development of the vocabulary used and appendices provided in updates to the document. The principles and criteria will be, in part, applicable to iXBRL but there may be no separation between the so-called 'source document' and the submitted XBRL information, which is embedded within, as they are both included within the same document. This iXBRL format is one that other markets have already addressed, and it may be useful for the AICPA Task Force to consider how other territories have addressed the topic and monitor related SEC developments to determine whether updates to the principles and criteria may be needed.
Q. Are there criteria that would be missing that would need to be added for this application?
A. The nature of iXBRL is that it is not clear that what you see is what will be transformed into the gXBRL instance document. For example:
These are just two examples of the many ways of how what goes into XBRL structured disclosures might diverge in an iXBRL document. As a result, a number of additional criteria may be required in an iXBRL reporting environment.
Q. Would any of the criteria not be applicable to this application, and if that is the case, how would they be addressed?
A. We believe that all of the proposed criteria would also be applicable to an iXBRL formatted report; however, there may be additional criteria which may also be relevant depending on the development of the SEC rules and guidance.
Q. Would it be helpful to have a separate appendix that would address the iXBRL application?
A. As noted above, we believe this guidance should be part of the agenda for the AICPA but should not delay the issuance of the principles and criteria as currently being developed.
Definition linkbase: At the present time, the SEC has indicated that it does not require that the filer's definition linkbase be designed in a manner consistent with the generic structure of the U.S. GAAP (Financial Reporting) Taxonomy, and has suggested but not required that companies use the existing relationship models where possible. The Mapping section also does not include any guidance related to the selection of existing line item/axes/domain members, requiring only consideration of each item. The SEC in its staff observations notes in item E.12 that "The EDGAR Filer Manual rules are believed to be adequate for level (i) tagging because it only requires detail (and therefore possibly axes such as class of stock or restatement) on the face of the financial statements. Feedback on EDGAR Filer Manual from filers experimenting with level (iv) tagging is encouraged." We believe that a dialogue on greater consistency in this area should begin soon. Companies are taking many different approaches, in some instances varying from the approach taken in the U.S. GAAP (Financial Reporting) Taxonomies and illustrated in Figure 38 of the XBRL U.S. GAAP Taxonomy Preparer's Guide. We encourage the AICPA to have a dialogue with the SEC to provide more guidance to the Group 2 detail taggers, whose work is now beginning, based on the experience of Group 1 detail taggers.
We appreciate the opportunity to express our views and would be pleased to discuss our comments or answer any questions you may have. Please contact Marc Panucci (973-236-4885), Chuck Harris (973-236-5340) or Mike Willis (813-340-0932) regarding our submission.