SEC Final Ruling
A few known facts from the final ruling for the Interactive Data for Mutual Fund Risk/Return Summary that you might be interested to know:
Compliance Date: The rule requires that all mutual funds must submit interactive data (XBRL) of risk/return summary information from the prospectus filed pursuant to rule 497(c) or (e). The first required submissions will be for initial registration statements that become effective after January 1st, 2011. The interactive filing must be filed after effectiveness of the related filing, but no later than 15 business days after the effective date of the related filing.
Liability: New rule 406T of Regulation S-T addresses the liability of and interactive data file. The liability provision is less severe than that of the full filing but it is only applied until October 31, 2014, and, thereafter, an interactive data file will be subject to the same liability provisions as the related official filings.
Data Tags: Under the rule, mutual fund companies are required to submit their risk/return summary information using the most recent list of tags released by XBRL US as approved for use by the SEC. Interactive data is required for the entirety of the risk/return summary information, including information for all series and all classes. One of the useful aspects of interactive data is its extensibility (filers can create custom tags to accommodate unique circumstances); however, the use of custom tags also reduces the ability for the public to compare similar information across funds. In order to promote comparability across funds, the SEC is adopting the rule provision that limits the use of extensions to circumstances where the appropriate element does not exist in the standard list of tags.
How to Prepare Interactive Data for Mutual Fund Risk/Return Summary
The process of preparing an interactive filing for mutual fund risk/return summary is not that different from preparing an interactive filing for a corporate financial report. However, compared to the complexity of the US GAAP taxonomies (which contain over 15,000 elements), the risk/return summary taxonomy is much, much smaller (< 400 reporting elements, what a relief!) and therefore should be simpler to understand and navigate.
With the Crossfire Reporting Platform, all company taxonomies and tagging templates would be reusable across funds for a given company. The following diagram depicts a typical process for a mutual fund company that uses Crossfire for preparing their filings.
Figure 1 – Using Crossfire to Prepare Interactive Data Filings
The Crossfire Wizard enables the preparers to create funds and classes automatically and dynamically to:
(1) Reduce the time to create the “dimension members” and prevent errors;
(2) Allow the preparer to just create a single extension taxonomy and dynamically attach proper funds and classes for interactive data filings.
Figure 2 – Crossfire Wizard Automatically Created Dimension Members based on Selected Funds/Classes
Within Crossfire, the preparer can easily format the BAR CHARTS (for annual return data) and create TABLES to disclose the Shareholder Fees and Operating Expenses data.
Figure 3 – Crossfire – Create Tagging Template/Populate with Data – Using Excel to Customize Bar Chart
Figure 4 – Create Tagging Template/Populate with Data – Using Excel/Word to Format Tables/Footnotes
Can’t Start Soon Enough
It’s time for mutual fund companies to start evaluating options for preparing interactive data based on the risk/return summary taxonomy. Lessons learned from the mandate of filing XBRL for corporate financials should also be valuable for executives in mutual fund companies.
So what can finance executives do now to lessen the pain? “My recommendation is that people get involved as far in advance as practical,” says Fred Bleier (chief accounting officer at International Paper) whose company ran into last-minute software glitches despite months of preparation and a test filing last year. (Read the article in CFO Magazine)
Start early, and look for solutions that are designed based on a deep understanding of XBRL, mutual fund risk/return summary taxonomy and EDGAR filing rules and you will guarantee success in 2011.
Tags: Compliance, Interactive Data, Mutual Fund, Risk/Return, SEC, XBRL
