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SEC Cracking Down on Inappropriate Custom Axis Tags

Lou Rohman, Vice President, XBRL Services, Merrill Corporation | July 06, 2016

I talk a lot — on this blog, at seminars and tradeshows, and with our clients — about the critical importance of consistency in improving XBRL data quality. One hot topic in XBRL data consistency: the inappropriate use of custom axis tags. Filers increasingly create custom axis tags when applicable standard axis tags already exist in the US GAAP Taxonomy. It hurts overall data quality, and now the SEC is taking notice.

What is a custom axis tag?

Axis tags enable filers to categorize information, such as revenue by segment. The 2016 US GAAP Taxonomy includes more than 300 standard axis tags. A custom axis tag is a unique axis tag created by the filer. They are allowed, but are reserved for the most complex disclosures with truly unique categories of information. Unfortunately, the SEC Staff Observations on custom axis tags published in March 2016 showed that half of all filers of Form 10-K created at least one custom axis tag in 2015 — often when appropriate standard axis tags existed.

SEC’s Mike Willis: Custom axis tags are "common problem”

Merrill recently talked with Mike Willis, the assistant director in the SEC’s Office of Structured Disclosure, about the inappropriate custom axis tags. He said it’s a “common problem” that “adversely impacts usability, analysis and comparability of dimensional disclosures.” Willis stressed that while axis tags “may sound like a complex topic” to filers, even large organizations with complex disclosures will find that the 300-plus standard axis tags in the current taxonomy more than fit their needs.

Tips for avoiding inappropriate custom axis tags

  • Maintain understanding of latest US GAAP Taxonomy: The last four iterations of the US GAAP Taxonomy added 56 new standard axis tags. Properly tagging your disclosures requires an ongoing understanding of these new tags.
  • Review and re-evaluate custom axis tags every year: I see too many filers continue using custom axis tags from past years’ disclosures, even though the most recent taxonomy includes an applicable standard axis tags.
  • Standard axis tags can be used multiple times: There is no limit to how many times you can use a standard axis tag, but many filers mistakenly create a custom axis tag when the same axis tag is needed a second time.
  • Use standard line item tags instead of axis tags whenever possible: For example, standard line item tags already exist for different types of debt, so there’s no need to create a custom axis tag for “type of debt” in order to categorize debt line items.

SEC warns of continued crackdown — clean up your data today

From the SEC’s March observations, it’s clear to me that custom axis tags will remain a focus of data quality improvement efforts. Moreover, future use of inappropriate custom tags could lead the SEC to go beyond simple corrective guidance and “pursue other action.” No organization wants this extra attention, and I doubt anyone wants to be the target of this “other action.” It’s critical that filers move to clean up custom axis tags — whether handling XBRL tagging internally or turning it over to consultative experts.


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