Sustainable Data, Open Standards and XBRL News – Written by Gianluca Garbellotto + Guest Bloggers

XBRL FAQ: Does a Taxonomy Extension Create Additional Burdens for the Base Taxonomy Owner or the Extender?

Q Does the fact that a user creates an extension to a regulatory taxonomy create confusion and additional burdens for the owner of the base taxonomy (the regulator), for the filing process in general, and for the extender, for example when a new version of the base taxonomy is released?
A No, it does not. An extension to a taxonomy can be created for one of the following reasons:

  1. Because the filing program supported by the base taxonomy is an open program – which means that it allows, or even requires, filings based on a filer-specific extension to the base taxonomy. We will refer to this kind of extension as a “public” taxonomy extension;
  2. Because the owner of the extension intends to leverage a publicly available taxonomy internally, for purposes that are not directly or necessarily related to a filing program or to the purposes for which the base taxonomy is created and maintained.  We will identify this kind of extension as a “private” taxonomy extension.

If the taxonomy extension is created for the purpose of filing XBRL reports within an open XBRL filing program, the regulator receives and accepts the extension together with the filings. The rules for the creation of a valid public taxonomy extension are set by the regulator and designed to make extensions consistent with the processes of reception/consumption of the filings. It is also important to remember that the XBRL Specification supports the creation of extensions in a way that makes it possible to easily separate the base taxonomy from its extension – see the previous XBRL FAQ on the topic. A taxonomy extension never changes or deletes anything in the base taxonomy; it only adds something new to what is in the base taxonomy, or prohibits something that is already there. This mechanism makes it easy for the regulator to either ignore or consume selectively the extension or parts of it.

If the extension is created by an organization that intends to leverage the base taxonomy internally and customize it for a specific internal process or purpose, the owner of the base taxonomy is not even aware that the taxonomy has been extended. It is totally possible that the organization that creates the private extension is not even subject to a regulatory mandate that requires the use of the base taxonomy being extended – the taxonomy just happens to be a valuable, authoritative and free knowledge base of reporting concepts, documentation and related resources that are useful to the organization internal processes. Even if the organization is required to use the base taxonomy for regulatory compliance it is easy to create instances with only the subset of data that is valid against the base taxonomy for the purpose of eFiling, and create instances that include extension data for other internal purposes.

The release of a new version of the base taxonomy requires the release of a new extension. The content of the extension can remain the same, or change because of increased scope or to leverage the new resources added to the base taxonomy. Designing the architecture of the extension and the guidelines for its maintenance in a way that make it easy to adapt to the evolution of the base taxonomy is key for a sustainable life cycle of the taxonomy extension and for the efficiency of the processes that it supports.

The fact that private extensions to XBRL taxonomies are created even when a regulatory program does not allow extensions is a reality and a key part of the value proposition of XBRL for the regulated community. Regulators should keep this fact in mind when designing their taxonomy architectures, keeping them as simple as possible to make extension easier and providing information and guidelines for an effective extension to facilitate the process.

If you have a XBRL question that you think is of general interest, just contact me or send me a direct tweet at @iphixbrl. I will answer it as an XBRL FAQ.
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