Some SEC filings (such as 10-K, 10-Q, 20-F and many others) require that material facts be identified (tagged) using “concepts” defined in a standard taxonomy such as US-GAAP (US Generally Accepted Accounting Principles), or IFRS (International Financial Reporting Standards). The SEC stipulates additional taxonomies for other specific reporting, such as executive compensation disclosures (ECD), ESG compliance (ESG), Closed-end funds (CEF), Business Development Companies (BDC), etc.
The primary purpose of this tagging is to enable machine readability, i.e., the filings can then be processed by software which can extract significant data from the filing by examining these tags. When viewed through an “iXBRL viewer”, the filing displays as a regular web page with markers enclosing the tagged pieces of data. These markers are “interactive”, i.e., clicking a marker displays the underlying tagging. Hence the term “interactive data”.
When making these filings, you can opt to prepare and submit them in-house yourself, or outsource them to a service provider.
To prepare and submit these filings in-house, you will need:
- Appropriate SEC EDGAR Filing Software (click here for an example) or access to a filing platform
- Knowledge of US-GAAP/IFRS and at least basic familiarity with XBRL
- Learning/training on use of the software to properly do the XBRL tagging
In the old days when EDGAR filings were purely in HTML format, preparation of the files in-house was relatively easy, and in most cases almost automatic, with the use of appropriate EDGAR HTML software. That is not the case with Inline XBRL (iXBRL) filings. XBRL tagging is not automatic – it is a largely manual process, requiring not just knowledge of the tagging process but also familiarity with (1) US-GAAP/IFRS and other relevant taxonomies, (2) accounting principles, and (3) the financials of the reporting entity. If you opt for the in-house option, you need to factor in the cost, time and effort associated with all of this, as well as the cost of the filing software or platform, which may be a subscription model or may involve an up-front cost with some ongoing maintenance fees.
If you’d rather avoid the cost, time, effort and hassle of preparing iXBRL filings in-house, outsourcing them to an experienced SEC EDGAR Filing Agent or service provider is a good alternative (click here for an example). The filing agent will take care of all the messy details, and ensure a good filing that will be accepted by EDGAR and the SEC. The factors to consider with selecting a filing agent are:
- Cost – Some service providers require an annual contract possibly with a fixed fee, but many filing agents will work with you on per-filing basis that does not lock you into any contract. The cost will typically depend on the cost and complexity of your filing, and can range from under $400 to several thousand dollars.
- Credentials – The filing agent should have its own credentials with the SEC, so it can file on your behalf without requiring your SEC password.
- Experience – To ensure a good filing, you’ll want a filing agent or service provider who is experienced with XBRL tagging, with access to accountants or staff with accounting knowledge.
- Accessibility, Reliability and Timeliness – The service provider should be readily accessible by phone or email, and should immediately respond to your queries. Missing deadlines is a complete no-no.
- Proofs – Before submitting your filing, the service provider should provide you with filing proofs showing exactly how the filing will appear on EDGAR. This includes hosting an interactive “iXBRL viewer” proof, so that you can readily examine the XBRL tagging and also experience the filing exactly as users will once it is on EDGAR.
- Last-minute changes – The service provider should be able to rapidly and accurately accommodate last-minute changes.
A reliable and experienced SEC EDGAR Filing Agent can take the hassle and anxiety out of your filing preparation workflow, and can be a cost-effective alternative to preparing your filing in-house.