Digital Financial Reporting

A milestone of 75 disclosure templates has been reached. This creating these disclosure templates is a lot of work, but as you might imagine one learns a great deal from the exercise.

One thing I am discovering is that good models produce good renderings from good rendering engines. I am looking at these disclosure templates using the renderings of the SEC viewer, CoreFiling Magnify(a document review application), and the XBRL Cloud Viewer(the same application used by the XBRL Cloud Edgar Dashboard).

I distill "good model" down to the following essence:

• Model the information, not the presentation
• Use good, meaningful labels
• Create logical, usually smaller, pieces which go together (as opposed to packing a bunch of reportable information into one big piece which is usually not logical, which might go together in the presentation but is logically separate pieces)
• There are WAY, WAY more business rules than I anticipated (this is a good thing, it helps you verify that you modelled the information correctly)

As I mentioned in another post, I found an SEC filing (Google) which had the characteristics of a good filing.  Well, there are others. For example, FERRO CORP (their XBRL instance, their documents on the SEC web site) is another generally good modeling.

Take a look at both of these filings using the SEC viewer, Magnify (ask CoreFiling for a 30 day trial), or XBRL Cloud (see Ferro Corp here, Google here). 

Also, if anyone is aware of other publicly available viewing software please let me know about it.

There is another discovery or realization.  The SEC viewer does not allow you to "pivot" the information reported by an SEC filer.  Both the XBRL Clould viewer and the CoreFiling Magnify viewer do allow you to pivot the information. 

I would say that upwards of 80% of well modeled information looks good on the first rendering that you see from all three of these rendering engines.  If the rendering is not what you want, the CoreFiling and XBRL Cloud applications allow you to "tweak" the rendering by pivoting it, you can configure some options.  That gets the number of financial report components which look good upwards of 95% or so.  You cannot do this with the SEC viewer unfortunately.  Maybe some day, maybe not.

I would speculate that the software can be improved and get the good renderings in the neighborhood of 98%, maybe higher, for good modelings.  But, there are there are four specific issues that I see here:

1. Document of record: Is it the right thing to do to allow users of financial information to render the information in different ways than the creator of that information created it?  Frankly, you cannot stop an investor or analyst from doing this; but is it the right thing to allow from the SEC public company filer's "document of record".  Personally, I don't have any problem with this but I would be the first to admit that I don't understand all the legal or societal issues. Another way of saying this is that different users of the same information will have different views of the information using different software applications.  Is that a good thing?
2. Not 100% readable:  In an HTML filing, PDF, or some other "presentation" oriented format, the information is 100% readable.  The format is also "locked" (i.e. #1 above).  So, if you cannot read 100% of the information, what good is the filing?  It does not seem that we could live with 98% of the information rendering in a usable format.  It really needs to be 100%, all the time.
3. Difference between "Readable" versus "Pixel perfect" renderings: There is a difference between "readable" and "pixel perfect" renderings.  What is the required target?  Users are use to pixel perfect.  Will they accept readable renderings in exchange for the ability to pivot information, easily load information into analysis software, etc.? 
4. Lots and lots of pieces: Presentations organize lots and lots of small models into logical pieces, presented for easy consumption.  If you look at the Google and Ferro SEC XBRL financial reports, they are readable, but there are lots of pieces and you have to work a little harder to relate some of the pieces how you want them related.  On the other hand, software can help you navigate through the many small pieces and put the pieces together in way, way more presentations than you could the one single HTML rendering.

What will be acceptable to the creators and users of this information?  How much better can software tools do to fill some of these gaps in usability?  Will the trade-offs be understood by both creators and users of this information?

Time will tell.