XBRL (eXtensible Business Reporting Language) is the preferred format for digitizing financial reports that will be delivered to others in the company or the IRS and other companies. It is one of the most accepted forms of sending and reading financial information by corporations, financial houses, stock exchanges, and more. It focuses on providing interactive data with appropriate labels. Tagging allows the data to be tagged with proper elements of the accounting taxonomy (terms) that represent it.
Why is this beneficial?
Because all XBRL reports have the same taxonomy (or terminology), the numbers with one element are always comparable no matter how they’re otherwise described in the financial statement. Since 2012, all filings to the SEC must have detail tagging for the footnotes and financial statements. The requirements for the tags can be tricky, but you can do it yourself.
Many companies choose to outsource their SEC filing to other businesses because they can’t figure it out themselves or they don’t want to spend their time working on it. Therefore, you may not need to understand XBRL tagging entirely, though it does help to have a basic understanding of the tags and why they’re essential.
On your financial statement, each number and line item has to have an appropriate tag and should correspond with unit precisions and context periods, even those with parenthetical data.
Filers must block and tag footnotes using four levels based on SEC Rule 405.
The first level means that each footnote must be tagged in its entirety while the second level means that each accountant policy within the footnote must be tagged. Along with such, level three states that each schedule and table has to be tagged within that particular footnote, as well. The fourth level says that any numerical value, whether in table or text, must be detail tagged, as well. Visit Colonial Stock Transfer Company, Inc. for more information.