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Three Software Applications Used to Verify Core Financial Report Semantics

Three different software applications get the same results using three different code implementations when they run the Financial Report Semantics and Dynamics Theory core financial report semantics (see section 2.13 and the proof).

  • Microsoft Access Prototype: The first application I used to prove the semantics was a working prototype application which I built using Microsoft Access.  I used that application to figure out how to get the information and just generally dink around and see if the SEC financial filings would look as I thought they might look.
  • CoreFiling Magnify/Sphinx: The second was CoreFilings review tool Magnify using rules generated by their other product Sphinx to build and run the rules.
  • UBmatrix/Edgar Online XBRL Processor using XBRL Formula: The third was UBmatrix's XBRL processing engine XPE. The tool that I used to build those business rules was Microsoft Notepad.

Basically, I am getting the same results from all three of these software applications. That is a very good sign. While I did not run the entire battery of tests like I did for the balance sheet here, I did spot check both the Magnify/Sphinx results and the XPE results and they are as I would have expected.  Further, the XBRL Formulas which I created could actually run in any XBRL processor which supports XBRL Formula.  That is one of the advantages of XBRL Formula.  The down side is that creating XBRL Formula can be rather challenging, creating Sphinx rules is much, much easier.

CoreFiling offers a 30 day trial of Magnify.  I would suggest taking advantage of that.  Here are the Sphinx rules which I created.  First, here they are in their raw format, basically text. Second, here is the rules basewhich you can load into Magnify.  (If you cannot figure out how to load this ask CoreFiling support or email me, I will provide you with a set of instructions.)

UBmatrix offers a free download for noncommercial use.  The XBRL processor comes with a sample application interface you can use to run XBRL Formual validation.  You can go here and sign up.  To try the rules using their tool, you will need this XBRL Formula file.  You can download the file or just point the application to this URL. Be aware that this works only with the 2011 US GAAP taxonomy; you have to change the namespaces to work with the 2009 taxonomy.

Side note: Arelle is an open source XBRL processor which has XBRL Formula capabilities.  I cannot read the validation results report so I have no idea if it outputs the same results or not.  But, if you are shopping simply based on price, you cannot beat this free open source XBRL processor.  You can download Arelle here.

Here are three SEC XBRL financial filings which show that they are valid using my Microsoft Access application, CoreFiling Magnify, and UBmatrix XPE.  All of these applications give the same results for the tests in the proof section of the Financial Report Semantics and Dynamics Theory:

  1. My Model SEC XBRL financial filing: (for more info see here) These are the UBmatrix XPE validation results.  (This is an older version of the validation results, I have way more rules this one including filer specific validation rules.  These were also created within Magnify, still doing some tuning on those, will make them available later, these are very good examples.)
  2. Bitstream Inc: (for more info see here) Their validation results from UBmatrix XPE showing no errors. Trust me on the Magnify results, I don't have permission to make their validation results files available at this point. I don't really have a report for the Microsoft Access database application prototype.
  3. DEMAND MEDIA INC: (for more info see here) You can see by the XPE validation results that there are no errors. Magnify similary shows no errors, as does my Access prototype application.

Now, these filings each have errors.  These errors are quite easy to see and are pointed out by each of those same three software applications:

  1. Intelimax Media Inc: (for more info see here) Their balance sheet is off by $50,000, probably due to a typo or something.  XPE validation results. Note the "notSatisfied" result and the message "$v:VARIABLE_Assets=974344 = $v:VARIABLE_LiabilitiesAndEquity=924344". This JPEG of the SEC filing's balance sheet clearly shows the error.
  2. FORCE ENERGY CORP: (for more info see here) This balance sheet is off because Liabilities and equity for both the current and the prior period were entered as NEGATIVE values, rather than positive values.  You can see that here in this XPE validation report.  You can also see it here clearly on this JPEG of the actual balance sheet.
  3. ZALDIVA INC: (for more info see here) Some people may not consider this an error; but I do.  This is basically sloppy and if thousands of other filers can balance their balance sheet, the 9 filers with minor filing errors can balance theirs also.  The balance sheet does not balance, it is off $2 which can be seen from this XPE validation report.  You can see this cleary on this JPEG of their balance sheet. You could put a tolerance within XBRL Formulas or Magnify rules to deal with this, but really?
  4. Original Source Entertainment, Inc: (for more info see here) Don't quite get this but the XPE validation report points out that the balance sheet does not balance.  The amount is off by the amount of common stock for both periods, as can be seen by this JPEG.
  5. TEXAS PACIFIC LAND TRUST: (for more info see here) Now, you need to look close at this one. If you look at the SEC balance sheet per this JPEG, nothing seems strange.  But when you look at the XPE validation report, what is going on becomes clearer. See this more clearly using the Magnify interface and you see that the filer reversed the sign of the fact assets for both the current and prior period. If you try and foot the value for assets manually, you see a second error. The filer modeled "Land" incorrectly, so the value would not add up correctly.  But, this was not caught because the filer created no XBRL calculations to verify that Assets foots correctly.

I cannot wrap this up without pointing out three things that I really like about Magnify.  The screen shot below are the validation rules checklist which is provided, which is formatted extremely well.  The first thing I really like is that ALL the rules are shown, the ones which are validated by the software and the ones which need to be validated manually.  Notice the light gray check marks.  Those need to be validated manually.  Second, the rules I created show up with all the other rules.  There are no separate lists of rules in different places, there is just one list.  Third, all the rules are shown, ones that pass plus ones that fail and they are distinguished nicely in the interface.

So there you have some things you can experiment with, good examples and not-so-good examples of filings and how core financial report semantics can be verified quite easily.  I show three software applications can do this type of work, but any XBRL processor which supports XBRL Formula can process that XBRL Formula file which I used.  If you have an XBRL Formula processor, try it out.  Be sure to let me know if it does or does not work for you.  Then, perhaps I can expand my list even more.

Posted on Wednesday, February 29, 2012 at 12:08PM by Registered CommenterCharlie in , | Comments1 Comment

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