On September 7, 2023, the Staff of the Division of Corporation Finance (“Division”) of the U.S. Securities and Exchange Commission (“SEC”) issued a sample comment letter (“Letter”), containing sample comments that the Division may issue to companies relating to the disclosure of financial and other information using the eXtensible Business Reporting Language (“XBRL”) format.  The SEC’s rules require companies to use XBRL and Inline XBRL formats to present or “tag” certain financial and other information in their registration statements and periodic and current reports.

The Division referred to the Financial Data Transparency Act, which requires, among other things, that the SEC establish a program to improve the quality of the corporate financial data filed or furnished by issuers under the Securities Act of 1933 Act (the Securities Act) and the Securities Exchange Act of 1934 (the Exchange Act).  The Staff of the Division stated that it has provided comments relating to XBRL and Inline XBRL to companies through the Division’s selective reviews of filings.  The Letter identified the following XBRL and Inline XBRL issues that may be the subject of comments:

  1. Failure to include the required Inline XBRL presentation under Item 405 of Regulation S-T;
  2. Inconsistent XBRL tagging of materially different values between the number of common shares outstanding on the cover page of a company’s filing and on the company’s balance sheet;
  3. Pay versus Performance disclosure under Regulation S-K Item 402(v) must be in Inline XBRL for all required data points, in accordance with Item 405 of Regulation S-T and the EDGAR Filer Manual;
  4. Although it is permissible to combine sets of relationship disclosures into one graph, table or other format under Regulation S-K Item 402(v)(5), companies are still required to provide separate XBRL tags for each required Item 402(v) data point;
  5. Use of a custom tag rather than XBRL element consistent with current U.S. GAAP in an income statement, under Item 405(c)(1)(iii)(B) of Regulation S-T.

Companies should consider reviewing their use of XBRL and Inline XBRL with these comments in mind.  A copy of the Letter may be viewed here.