Digital Financial Reporting

SEC filings are providing good information relating to a question which has been asked and answered with differing views in the XBRL community for years: If I change a network, do I need to add a new concept?

Continuing on with my analysis of the cash flow statements of 408 filing to the SEC, this is what I see:

1. Of 408 filers, 358 follow the US GAAP Taxonomy exactly as provided to provide information relating to the change in cash in the cash flow statement. I created an XBRL Formula to test the computation of the change (beginning balance + changes in cash = ending balance) are properly satisfied by the XBRL Formula.  Further, the calculations add up correctly (i.e. there are no calculation inconsistencies) for the net changes in cash for operating activities, investing activities, and financing activities. Two examples of these are 3M CO and ABBOTT LABORATORIES.
2. There were 5 filers (Allstate Corp, Citigroup Inc., The Chubb Corporation, Cablevision Systems Corporation, The Hartford Financial Services Group, Inc.) who added an extension concept to REPLACE the net changes in cash concept provided by the US GAAP Taxonomy.  Of these 5: (a) 2 filers changed the concepts involved in the calculation, (b) 3 filers did NOT change the concepts involved in the calculation. (The question being, so why did they feel the need to add the concept in the first place?)
3. One filer (BIOGEN IDEC INC.) did not change the changes in cash concept, but DID reconfigure the placement of the effect of exchange gains on cash, moving it outside the net increase concept provided by the US GAAP taxonomy.
4. Of the filings I looked at here, only 1 filer (BIOGEN IDEC INC.) had calculation inconsistencies within the net changes in operating, investing, and financing cash flows. (Why couldn't they get things to add up, but everyone else could?)
5. One filer (DTE Energy) added a reconciling line item "Cash and Cash Equivalents Reclassified from Assets Held for Sale" and did not add any extension concepts. Seem like that concept is missing from the US GAAP Taxonomy.
6. One filer (Enterprise Products Partners L.P.) moved the effect of exchange rate changes but did NOT change the changes in cash concept. (i.e. this now adds up differently than what the US GAAP Taxonomy specifies.)

Basically, there is a lot of consistency in that 358 filers seemed to be able to make things work as is.  However, there is inconsistency in the way filers where changing the US GAAP Taxonomy via their company specific extensions. Sometimes extension concepts were added but calculations did not change, sometimes calculations were changed and extension concepts were NOT added, sometimes calculations were changed and extension concepts were added in this one specific area of the taxonomy.

This begs the following questions:

• When exactly should a new concept be added to an XBRL taxonomy and when should an existing concept be used.
• If a calculation is changed, does that mean that a concept should be added because by changing the calculation you could be redefining the concept. For example, for the filer above who moved the impact of the effect of foreign exchange gains from the total net impact of changes in cash flows, has the user redefined "net impact of changes in cash flows"?
• Should filers be allowed to redefine all calculations, or only certain categories of calculations?  If so, why or why not and how does the desire for analysts to make comparisons across filers come into play here?
• In the specific case of the cash flow statement, if the filer uses some other concept than "us-gaap:CashAndCashEquivalentsAtCarryingValue", should the filer use that concept from the balance sheet in the cash flow statement as the concept being reconciled?  Some filers don't report that concept, but rather report the concepts "us-gaap:Cash" or "us-gaap:CashCashEquivalentsAndShortTermInvestements" or some other cash related concept.

Peer pressure could get the practices of filers more consistent, but it will probably take definitive guidance from someone on when it is appropriate and when it is not appropriate to add a new concept to a taxonomy.  The examples of inconsistencies in the cash flow statements of filers is only an example of the issue, the issue really relates to every area of the US GAAP Taxonomy and this issue is not exclusive to the US GAAP Taxonomy - basically all taxonomies have this issue.

Some concepts in a taxonomy are defined by what they are.  For example, "Assets".  Other concepts are defined by how they are calculated, such as perhaps "Cash and Cash Equivalents, Period Increase (Decrease)".  How are the two distinguished in the US GAAP Taxonomy?  Is there a way to distinguish the two?

Here are some more specific examples of situations which might be encountered which points out many points in the spectrum of situations which might arise:

• Say a filer adds a new balance sheet line item under current assets which does not fit into any of the other existing high-level balance sheet line items.  Should the filer redefine the concept "us-gaap:AssetsCurrent".  Probably not.  Should filers even be able to add high-level balance sheet line items, or should they be limited to adding lower level line items only?
• What if a filer does not agree with the way the income statement is organized and chooses to move things around.  Would that impact those subtotals provided in the US GAAP Taxonomy which have specific meaning which is implicitly defined by the nature of the line items which they contain.
• The disclosures of a financial statement have many, many different types of summary and detail concepts.  How does one know when they are defined by what they are and when they are defined by how they are calculated?

Again, if you are an accountant or an auditor and you want to understand these issues better, send me an email and I can send you the details of the analysis which I created.