Digital Financial Reporting

In my last post I discussed what I found when I analyzed the core financial integrity of the balance sheets of all 7,220 SEC XBRL filings for June, July, and August of 2012.

In this blog post I will discuss the core financial integrity of the top 100 SEC filers as determined by total assets of the filer.  This Excel spreadsheet has a summary of the data and findings.  This HTML page has the same information.

This is what I found:

• Only 3 core financial integrity semantics errors: Of these top 100 SEC filers, there are only three core financial integrity errors that I found: (1) HARTFORD FINANCIAL SERVICES GROUP INC/DE created an extension concept hig:NetIncreaseDecreaseInCash to express net cash flow; (2) HARTFORD LIFE INSURANCE CO created an extension concept hic:NetIncreaseDecreaseInCash to express net cash flow; (3) EXELON GENERATION CO LLC created an extension concept exc:LiabilitiesAndStockholdersEquityIncludingPortionAttributableToNoncontrollingInterestto express Total liabilities and shareholders' equity.  It would be hard to justify either of these three extensions given that 99% of all other filers used concepts from the US GAAP Taxonomy.
• Out of 900 data points, only 3 errors: So, out of a total 900 data points, there were only 3 errors!  That is great.  How did I get to 900? Well, there are 10 data points I was looking for: entity registrant name, document period end date, period start date, assets, liabilities and equity, liabilities, temporary equity, equity, net cash flow, net income. I did not really need one of them, entity registrant name.  So that leaves 9.  9 data points times 100 filers, that gives me 900.
• If total liabilities is not reported, causes data retrieval issues:  Not having total liabilities and I guess also total temporary equity reported causes problems extracting data because it is hard to know if you got the numbers correct.  What I mean is that it is almost certain that "assets" and "liabilities and equity" are correct because you can get the numbers and check to be sure that the numbers are the same (i.e. the balance sheet balances) and therefore you can be confident that you are working with the correct numbers.  But if (a) totals are not reported and (b) there is uncertainty as to which concepts a filer will be using on a fact; that leads to uncertainty as to whether you have actually retrieved the correct data or imputed values correctly.  What does this mean? Totals such as total liabilities, total temporary equity and total revenues should always be required to be reported because that allows those pulling out their data to be sure they are pulling out the RIGHT data.
• Balance sheets balance: The balance sheets balance for 100% of the top 100 SEC filers.
• Balance sheets exist: Balance sheets exist for 100% of the top 100 SEC filers.
• Root entities exist: Root entities exist for 100% of the top 100 SEC filers.  For example, while EXELON GENERATION CO LLC had 5 CIK numbers, there was exactly one root company into which the other entities flow. So, if you want to get the numbers, it is clear what entities to go after in the modeling of the information.
• No "audited" or "unaudited" members: None of these filers use an [Axis] to express that the information is audited or unaudited. (See the discussion about this in the prior post.)
• Document period end date always ties to balance sheet date for most current period: The document period end date always ties to the most current balance sheet date.
• Least confident in fact net income (loss): Of all these facts, I am least confident in the fact net income (loss).  There are two reasons for my lack of confidence.  First, there are so many different concepts filers could use for net income (loss).  Second, if filers use the wrong concept in the wrong order the wrong fact value will be retrieved.  This has to do with totals being provided.  I am looking for net income (loss) including the portion attributable to any noncontrolling interest and including any portion attributable to preferred stockholders.  It would be better, in my view, if one concept existed for this and if every filer used that one concept.

I am beginning to see automated use of this information rearing its head.  It is the little things that matter.  This is particularly true for smaller companies which want to extract information from the SEC XBRL public company information set.  Sure, big data aggregators can work through any data retrieval issues.  But, there will be a cost passed on to users for fixing these errors and therefore the cost of the data will be higher; perhaps much higher if there are lots of issues.  The fewer the issues, the more consistent the information provided, the easier it is to get the information, and therefore the cost of the information will be lower.

That is what I see.  How do you see it?