I am working to summarize the workflow, process, and techniques which I use to "examine" or "interrogate" or "scrutinize" an SEC XBRL financial filing. (I am consciously trying to avoid the words audit, compilation and review as they have special meaning to accountants.)
A number of things are coming to my attention.
First, there are two fundamental orientationswhich you can use to examine an SEC XBRL financial filing:
- XBRL technical syntax orientation. This orientation considers if the filing is following the XBRL technical syntax rules and, if I am not mistaken, 100% of these rules can be validated using automated validation processes. The US GAAP Taxonomy Architecture and the SEC Edgar Filing Manual (EFM) further constrain the XBRL technical syntax. As such, any XBRL tool which works with SEC XBRL filings has to create additional rules for those additional constraints.
- Financial reporting semantics orientation. This orientation considers the financial reporting semantics (or meaning) expressed in US GAAP. For example, "assets = liabilities + equity". Or, "assets foot". Or, "the income statement foots." For more information on financial reporting semantics, see this blog post.
Second, there are a number of different perspectivesyou can take when working with at an SEC XBRL financial filing. Another way to say this is that the best way to eat an elephant is a bite at a time:
- Fact perspective. You can work with one of the individual facts within the report. For example, you can be sure the characteristics of the fact are correct, that the value of the fact is correct, and so forth.
- Component perspective. You can work with a component of the report. A component is a set of facts which go together. For example, a balance sheet is a component, the document information is a component, or a disclosure is a component. From the component perspective, you can be sure that each of the facts in the component are correct and that the facts in the set properly relate to other facts in the set.
- Holistic perspective. You can work with the entire report or all of the components. For example, making sure that the components fit together correctly.
What you look at, how you look at it, and what you focus on is different based on which perspective you are using.
Third, you will need to work with different SEC XBRL financial filings, comparing them:
- Different versions of a filing. You will need to compare different versions of the same filing to manage changes between the versions.
- Different periods. You will need to compare the filings of different periods to be sure all the desired changes have been made and that undesired changes did not occur.
- Compare with peers. You will want to compare your filing with the filing of a peer or peers to compare and contrast differences in order to be sure you are taking the right approach to creating your SEC XBRL financial filing.
Finally, you can categorize the different report elements which make up an SEC XBRL financial filing into categories. Basically, people who a term such as "tag" or "element" are being vague. The different types of report elements within an SEC XBRL financial filing are:
- [Member] (sometimes the term [Domain] is used to indicate a special type of [Member] but that practice will be dropped.
- [Line Items] which contain concepts
For more information on these different report elements see here. Further, realize that relations between report elements are not random, there is some reasoning behind those relations, see here for more information about the relations between report elements. And finally, the different report elements have different attributes or properties. Knowledge of these different attributes/properties can make looking at the SEC XBRL financial filing more effective and efficient.
Personally, I find that the technique of using these different orientations, perspectives, and categories of the report elements which make up an SEC XBRL financial filing changes how you approach an SEC XBRL financial filing for the better. Doing so helps you do all the work which you need to so you can be confident that you end up with a quality result; but you don't waste time and therefore waste money.
What has your experience been?