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Overcoming Issues in Using all that SEC XBRL Financial Information

I explained in detail in this PDF why the SEC XBRL financial filing information is so hard to use and how to resolve that issue.  This document is helpful to that end, using the information; but it is also helpful to those designing or otherwise creating XBRL taxonomies because it helps them avoid the same problems.

Fundamentally, getting to the information is trivial and I walked you through how anyone with Microsoft Excel who can write rather basic macros can get at 100% of the information from all those SEC XBRL financial filings.  I even point you to a number of prototype applications you can download, reverse engineer, and create your own applications.  And frankly it is near magical how someone with even my limited understanding of programming can get to each piece of information and there is a lot that you can do with that information.

However, when you try to compare information you run into troubles. As I see the facts you run into so much trouble that you basically have to do a one-to-one mapping between each filing you want to use and some target you desire to use in order to compare two or more filings.

What this means, it seems to me, is that the only way an individual investor is going to get to use that information is if they buy it from some third party data aggregator who sorts all that data out for them, inuring substantial costs in the process and therefore having to charge hefty fees for the use of the information.

Is that really what the SEC intended?

If you look at why the information is hard to use by reading that PDF you will realize that solving this issue is really quite simple.  The FASB and SEC need only do a few rather easy things to do and the information will be easily comparable at a level which would make most people happy, it seems to me.

This is not to say that all comparability problems will be solved.  Those issues will take decades to figure out and relate to the nature of US GAAP and financial reporting in the US as practiced.  The easy way to make the information comparable is to turn US GAAP into "a form".  Then comparisons would be trivial, but the information would not be that rich or meaningful.  At the other end of the spectrum is to continue to give the users free reign to do whatever they desire, extend anything they want, report exactly how they see fit.  That will maintain the richness of and I believe highly valued style of financial reporting as practiced in the US today. Clearly what is reported could use some improvements, what I am talking about is the fundamental nature of public companies reporting to the SEC to tell their story, their way.  That is a highly prized characteristic of financial reporting as I see it.

Is it the case that some hybrid solution can be arrived at?  Some information is closer to that of a form and very comparable, but other sections of the report can be more ad hoc so companies can tell their story, their way.  Can some workable balance be struck between the two extremes?

What do you think the right balance should be?  How do you see the facts?

Posted on Friday, December 16, 2011 at 08:55AM by Registered CommenterCharlie in , | Comments1 Comment

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Reader Comments (1)

So the prototype of a Balance Sheet probably has characteristics
"Must have Assets, must have liabilities, must have owner's equity. The sum of the second two equals the first."
Then there are exemplars that all use this key principle, but include variations
"Assets is presented as the subtotal of current and noncurrent"
And
"Equity is first netted against noncontrolling interests."

Yes I like learning about these theories, and I appreciate your application to the XBRL situation.

On page 3, you describe one challenge in bringing at least the aligning all Balance Sheets; that network identifiers are different. Excuse me for speaking syntax, but that's the xlink:role attribute for each xlink:extended linkbase, right?

I thought some EFM rule prohibits using the same role as us-gaap? Am I mistaken? Maybe 6.13.1?

I'm a free spirit, at the beginning of my foray into XBRL I thought "forms" were the enemy. But at this point it seems like "forms" could bring renewed focus on the semantics instead of the syntax. Or shift focus from taxonomy back to instance. And discourage extensions before exhausting all options. Therefore I disagree on one point; information contained in a form can be as rich and meaningful as the form allows. But a rich and meaningful form might as well be called "software", I've heard you say elsewhere that few software encourages user to model information in semantically significant ways.

Hmmm it's a pickle!
December 16, 2011 | Unregistered CommenterNate Anderson

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