« Occurance of Fact Values in SEC Filings | Main | Analysis of Second Quarter of SEC XBRL Filings »

Cash Flow Statement: Issues XBRL Raises

OK, this is a good example of something which I have seen over and over in building XBRL taxonomies relating to financial reporting.  This issue is NOT just for the cash flow statement, but rather I am using the cash flow statement to point out the issue.

The question is this: How much leeway should those reporting financial information really be allowed? I am NOT saying that I know the answer to this question.  I can say that I do have an opinion.  What I have seen over and over in building the IFRS and US GAAP financial reporting taxonomies is that there are accountants who misinterpret reporting rules and create reporting inconsistencies as a result.

Here is the what I see.  The US GAAP Taxonomy for the indirect cash flow statement looks like this (this is the commercial and industrial companies taxonomy, basically all the taxonomies look like this in the area being discussed). Here is a view of the calculation relationsto come up with the net change in cash from operating, investing, financing activities as well as the exchange gain on foreign currency transactions. (OK, so here is the presentation view in that same tool.)

OK, so now I am a little confused.  If you look at line number 633 on the first report, you see discontinued operations.  These concepts appear both within operating cash flows from operating (line 316), investing (line 495), and financing activities (line 661) AND separately (see line 664, 665, and 666 on the report).

From the taxonomy, you cannot tell with 100% certainty cash flows from discontinued operations (line 667) is included in the reconciliation of the beginning value of cash to the ending value of cash, it is not shown in the calculation linkbase.  I think it should be included.

Two SEC XBRL filers reconfigured their cash flow statements.  See Citigroup and General Electric XBRL taxonomies to see how they structured their indirect cash flow statements.

The issues here to me are:

  • The US GAAP Taxonomy provides a concept "us-gaap:CashAndCashEquivalentsAtCarryingValue" on the cash flow statement (and on the balance sheet) which is the cash balance being reconciled; yet some filers use different concepts in the reconcilation including: us-gaap:Cash, us-gaap:CashCashEquivalentsAndFederalFundsSold, us-gaap:CashAndDueFromBanks, us-gaap:CashCashEquivalentsAndShortTermInvestments
  • The US GAAP Taxonomy has the total amount being reconciled as the concept "us-gaap:CashAndCashEquivalentsPeriodIncreaseDecrease".  Does that include or exclude discontinued operations AND should filers be allowed to CHANGE wheter that total includes discontinued operations?
  • The same deal seems to be happening with the exchange gain, us-gaap:EffectOfExchangeRateOnCashAndCashEquivalents, is that included or is it not? The US GAAP Taxonomy says that it is per the calcuation it shows.  At least one filer does not include that in the computation, but rather moved the relation (and they did not redefine the concept by creating their own concept).

What I am asking is how should these situations be handled, what sort of flexibility is allowed and/or should be allowed, what sort of comparability between these is appropriate for investors, and so forth.  What level of consistency is appropriate?  At what level of a financial is consistency and comparability important?

XBRL will help see these issues.  Based on decisions which are made or not made, a certain level of consistency and comparability will exist.  Will that be the level which is desired?  Who decides these things:  CPAs who prepare these XBRL filings?  The SEC?  Investors?  Analysts?  No one?

Again, I am not providing my opinion here (I do have one), I am simply raising the question.  This question can only be addressed appropriately once it is well understood.

And remember, this set of cash flow statement issues is an example, not the only issue.  Similar issues exist in other areas of the US GAAP Taxonomy and SEC XBRL filings.  Different areas of the taxonomy will likely require different criteria for arriving at a decision, but the issues are quite similar to the cash flow statement example shown above.


Posted on Tuesday, November 17, 2009 at 08:53AM by Registered CommenterCharlie in , , , | Comments2 Comments

PrintView Printer Friendly Version

EmailEmail Article to Friend

Reader Comments (2)

One of the criticisms I have of XBRL is the inability (unless I'm missing something) to identify statements by machine. For example, if I wanted to display just the cash flow statement from a 10-K, I don't yet see a mechanism that would guarantee selecting it from among all statements. While it's possible to use the taxonomy to tag elements normally associated with a cash flow statement, such tagging would miss concepts transferred from other statements to the cash flow statement, along with concepts the company creates.
May 28, 2010 | Unregistered CommenterBrent
There are actually mechanisms for this. The SEC did not build it into their viewer. Other software vendors have to write "viewers" into their software to support the US GAAP Taxonomy and the SEC implementation of XBRL, but have not. This entire process can be way easier than people are making it. Read the stuff in the "Business Reporting Logical Model" section of this blog.
June 14, 2010 | Registered CommenterCharlie

PostPost a New Comment

Enter your information below to add a new comment.

My response is on my own website »
Author Email (optional):
Author URL (optional):
All HTML will be escaped. Hyperlinks will be created for URLs automatically.