The Financial Accounting Standards Board (FASB) has begun to assess the efficiency and effectiveness of the US GAAP Financial Reporting Taxonomy – and changes could be on the horizon.
The board issued an Invitation to Comment on May 10, which addresses potential improvements to the usability of the GAAP taxonomy and to the processes that support taxonomy-related activities.
“Respondents should consider both the potential costs to implement the changes and the potential benefits of the changes in assessing the aspects in each review area,” the FASB said. “The FASB staff also is interested in hearing other suggestions that could help improve the efficiency and effectiveness of the GAAP taxonomy.”
Comments are due by June 15. The document contains instructions on how to submit feedback to the FASB.
The GAAP taxonomy is a list of computer-readable tags in XBRL that enables companies to tag financial data that are included in typical long-form financial statements and related footnote disclosures. The tags allow financial statement users to electronically search for, assemble, and process that data.
FASB staff is responsible for the ongoing development and maintenance of the GAAP taxonomy, which is applicable to public issuers registered with the US Securities and Exchange Commission (SEC).
Each year, the GAAP taxonomy is updated to reflect new Accounting Standards Updates (ASUs) and other enhancements.
According to the Invitation to Comment, possible improvements to increase the usability of the GAAP taxonomy will be analyzed from three aspects:
- Design of the GAAP taxonomy.
- GAAP taxonomy reference to the FASB Accounting Standards Codification.
- Implementation resources supporting registrant use of the GAAP taxonomy.
In regards to possible process improvements, FASB staff have identified two that would lessen the disconnect between the continual process of improving GAAP and the annual acceptance process for the GAAP taxonomy.
- Issuing proposed changes to the GAAP taxonomy concurrent with the issuance of the FASB’s proposed and final ASUs.
- Replacing the 60-day comment period with a process that allows both feedback for the changes to the GAAP taxonomy concurrently with the development of an ASU and feedback for projects identified by FASB staff as they are developed, which would alleviate staff resource constraints.
After the FASB reviews the comments it receives about the GAAP taxonomy, staff will report its findings and recommendations to the SEC in approximately six months.