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Analysis of Dow 30 and Fortune 100 for Core Financial Integrity

In a prior post I covered my analysis of 8289 SEC XBRL financial filings for core financial integrity.

This post is an analysis of the Dow 30 and Fortune 100 for the same core financial integrity.  You can download the raw data here in Excel.

The summary of the analysis is this: (Note that the core financial integrity relates to the existence of concepts for: assets, liabilities and equity, equity, net cash flow, and net income (loss); I also checked to see if the balance sheets balance).

  • Dow.  Of the 150 total possible data points (30 entities x 5 data points); 149 were discernible, only 1 was not. All the balance sheets balanced. The one data point for which an extension concept was created was net cash flow for General Electric.  It is likely the case that General Electric chose to create an extension concept because of an issue related to discontinued operations in the definition of net cash flow; so they created an extension concept.  (This issue was corrected in the 2013 taxonomy).  However, there were two other DOW companies who were in the same situation as General electric (i.e. had cash flows from discontinued operations) and they made the choice to use the existing concept to express net cash flow.  Further, of the total of 8289 reporting entities analyzed (the complete set), 724 (or 96%) of a total of 760 filers where also in the same situation and chose NOT to create an extension concept.  The remaining 36  (which is 4%) chose to create an extension concept as General Electric did. So General Electric is not incorrect in what they did, but it seems that they would not have been incorrect to follow the path of the 2 other DOW companies and the 724 who chose to use the existing US GAAP Taxonomy concept.
  • Fortune 100.  Of the 500 possible data points (100 entities x 5 data points); 494 were discernible, only 6 were not. All the balance sheets balanced. Like the DOW, there were similar issues with net cash flow extension concepts (4 filers created extensions).  Another issue related to extending "Liabilities and Equity" and an issue related to extending Equity.  You can take a look at the Excel comments I provided.  See if you think the modeling of these concepts was appropriate.

Per what I understand about the 2013 US GAAP Taxonomy (which was just released today by the FASB); there is now no reason for any of the issues related to the DOW or Fortune 100 to be issues in the future. The issues relating to the lack of clarity as to how equity and liabilities and equity when a filer has member equity are now clear in the 2013 taxonomy.  Same with the definition of net cash flow, that has been cleaned up.  As such, these 5 data points for the DOW and Fortune 100 should all be resolved and therefore all the DOW and Fortune 100 filings should have zero issues with regard to these five core financial integrity checks which I do.

We shall see what happens in February.

Posted on Friday, December 21, 2012 at 05:34PM by Registered CommenterCharlie in | CommentsPost a Comment

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