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Companies Are Asked to Give More Details About XBRL Calculations

The SEC asked companies to provide more information about how they calculate line items in financial statements prepared in the eXtensible Business Reporting Language (XBRL). The market regulatory said its staff in the Division of Corporation Finance, during their reviews of company filings, had found instances when companies failed to explain how they calculated the XBRL data.

The SEC asked companies to provide more information about their calculations of line items in financial statements prepared in the eXtensible Business Reporting Language (XBRL) in a July 7, 2014, staff letter.

In the Dear CFO Letter, Sample Letter Sent to Public Companies Regarding XBRL Requirement to Include Calculation Relationships, the SEC said its staff in the Division of Corporation Finance, during their reviews of company filings, had found instances when companies failed to explain how they calculated the XBRL data.

The issue is caused by some of the subtle differences in the appearance of a financial statement prepared in html or a pdf format and one prepared in XBRL. Relationships among some sets of numbers in an html or pdf financial statement may be readily apparent.

“It’s kind of implied by the way the data is presented,” said Campbell Pryde, president and CEO of XBRL US, a trade group that promotes the use of interactive data. “But when you represent that in XBRL, it forces you to explicitly say this number plus this number plus this number equals this number.”

The SEC has been reminding companies for some time through its filing review and comment letter process to explain the calculation relationships. The Dear CFO Letter is the agency’s effort to make sure more companies get the message.

“This has been a particular bugbear of some people within the SEC,” Pryde said.

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Meet Paul Raymond

Meet Paul Raymond

Mr. Raymond is a sought after speaker in tax controversy law by many attorney, accountant, and business groups and at the request of the Internal Revenue Service, has presented programs at the IRS Nationwide Tax Forum, attended by tax professionals throughout the United States.

Additionally, he continues to be an active member in the Section of Taxation, American Bar Association, where he was the Past Chair of the Employment Taxes Committee.

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