Digital Financial Reporting

If you are a CPA or otherwise involved in financial reporting or analysis of financial information, you do not want to miss this blog post!

I received an email from someone last week making me aware of an XBRL enabled analytics system which was released last week.  You can find this system here.

Per the about page of the web site:

Open Analytics is a pioneer effort in a public-private partnership between ACRA and WHK Horwath, which aims to provide, to the Singapore business community, an efficient way to access salient financial analysis and benchmark performance data for fundamental financial analysis, investment analysis, credit analysis or other purposes.

From what I can tell, there are approximately 99,000 corporate financial filings which are apparently made to the government of Singapore in the XBRL format.  The information in those corporate XBRL filings is being distributed on this system.  This is what I did to take a look at this system:

1. A video is made available which walks you through what you can see on this system.  The video is well done and only takes about 5 minutes to watch.
2. There are two sample companies where you can go look at the actual working system.  This is really nice!  You can see a link to the samples you can use at the bottom of the main page.  Or, you can just click here.  I recommend the first analysis (OAKWELL ENGINEERING LIMITED).
3. Be sure to walk through the analysis, looking at all the buttons and places you can click.  Also, you can print a report.  Be sure to look at that.

I don't want to take anything away from this system at all, this is one of the cleanest, well organized, easiest to use systems I have ever seen.  But I do want to point out a couple of things.

The first is that the data which feeds this system is more of a static "form".  Because the data is form-like, doing these comparisons is really straight forward.  This is because the data submitted by each filer is the same and easily compared.  By contrast a system such as the US SEC is more "dynamic".  For data submitted to that type of system, this type of system is more challenging to create.  One of two things needs to happen in order to make a system like the SEC database of public companies work like this system.  The data coming into the system needs to be made more comparable and consistent.  Alternatively, you could throw a lot of programming at the inconsistent data and try and make it more consistent by programmatically resolving inconsistencies such as the inconsistent revenue concepts used (or other concepts).  A compromise between the "form" and more "free form" information coming into the US SEC is a compromise between the two.  Have the higher level information be more rigidly specified (things like "assets", "liabilities", "equity", "cash flows from operating activities", "cash flows from financing activities", "cash flows from investing activities", "debt", "cash and cash equivalents"; basically whatever can be agreed on would make using that level of information easier. Then, the more detailed information could still be more dynamic.  You cannot make this totally free form or it will not be useable in systems like this at all.  You don't want to make the SEC data a "form" as that reduces the quality and usefulness of the filings.  Some compromise between the two would provide the both ease of use and usefulness.  Arriving at that compromise is the challenge.

A second point is the visualizations.  I am totally into charts and graphs, and man; these new types of visualizations are REALLY nice!  Realize that it is not XBRL created those nice visualizations. But what XBRL does do is provide more information to put into those visualizations without having to rekey the information.  And, as more and more information is made available in the XBRL format, more and more information will be available to put into these fantastic visualizations at low marginal cost.  As a side note, here is a TED presentation (about 20 minutes, amusing, definitely worth watching) which shows these bubble charts in action.

A final point is that while the information being available in these nice visualizations and other formats is really nice, why can't I see any XBRL so I can pull out whatever data I want to pull out and format that data however I want to format it, not limited by these nice interfaces which are quite useful but restrict flexibility.  I don't know if some sort of API or XBRL files are being made available, but I cannot see it.  It certainly would not be hard to make such an API or XBRL interface available.  Not sure why this system did not make this available, I will certainly inquire about this.

The bottom line here is that this system is an example of the type of functionally which can be made available.  This type of functionally will be the benchmark others will have to achieve.  The marginal cost of reusing information is peanuts because of low cost infrastructure, such as the Web, available to literally everyone.  For more dynamic systems such as the US SEC public company financial information, these types of results are harder to achieve, but still very, very possible to achieve.  All that is needed is a good vision and a desire to achieve that vision.  All the technology is there to use.  Me, and I believe others, will still want those XML tags so we have the flexibility to do whatever we desire with the information.  Think linked data!