The SEC's Office of Structured Disclosure reminds the financial reporting community that Rule 405(e) of Regulation S-T provides guidance for tagging requirements for financial statement schedules, which includes a fund's Schedule of Investments (SOI), under rules 12-12, 12-13, 12-13A through 13D, and 12-14 of Regulation S-X. Accordingly, a Business Development Company (BDC) is required to tag its SOI in compliance with the tagging requirements in Rule 405(e) of Regulation S-T.
The SEC’s Division of Economic and Risk Analysis (DERA) assessed SOI tagging in BDCs’ Forms 10-K for fiscal year ending in 2024, and found these common tagging issues:
- Tagging the amount of “liabilities in excess of other assets” inappropriately created a custom element or tagged it with Investment Owned, Fair Value along with dimension Investment, Identifier [Axis]. Instead, filers should use the standard Noninvestment Assets Less Noninvestment Liabilities element.
- Tagging open interest rate swap contracts inappropriately used Derivative Instrument Risk [Axis] or Investment, Identifier [Axis]. Instead, filers should use Open Swap Contract, Identifier [Axis].
- Tagged data did not include the issuer affiliation information at the investment level.
- Subtotals of investments were inappropriately tagged (by industry or by investment type with Investment, Identifier [Axis]. Instead, these subtotals should be tagged using dimensions Industry Sector [Axis] or Investment Type [Axis].
Also, the SEC reminds filers of the importance of accurate and consistent tagged data across different BDCs. The SOI contains important data about a BDC’s investment portfolio. Updated Question F.7 of the Staff Interpretations and FAQs Related to Interactive Data Disclosure provides general guidance on the tagging requirements of the SOI.
The Financial Accounting Standards Board’s GAAP Taxonomy Implementation Guide Series – Financial Services – Investment Companies (including SEC S-X schedules for BDCs) provides examples of the modeling for reporting by investment companies, including the SOI. Filers are encouraged to review SOI tagging and make necessary corrections.
For more data quality reminders, please visit the Staff Observations and Guidance webpage on the SEC’s website.
Source:
Incomplete and Inappropriate Tagging for Business Development Companies’ Schedule of Investments (sec.gov)
