Financial Reporting Trends, Tool for Accounting Analysis
Tuesday, February 12, 2013 at 07:56AM
Charlie in Demonstrations of Using XBRL, Digital Financial Reporting

Financial Reporting Trends is a tool which I created for myself. It is inspired by the AICPA's Accounting Trends and Techniques. Whereas Accounting Trends and Techniques is limited to about 500 SEC public company financial statements, Financial Reporting Trend suses all 8,000 SEC XBRL public company financial filings (10-K and 10-Q).  Reporting entities can be sorted and filtered in numerous ways.

My tool is far beyond what I would consider a prototype or a demo.  It is real, it works.  True, it is built using Microsoft Access which is a rapid application development environment which I understand and have been building applications in for over 25 years.  But my programming is simple because all of the heavy lifting has been done for me by a web service which serves as the data sources for all that SEC XBRL financial information.

I am using web service provided by XBRL Cloud.  The web service is not publically available yet, it is still a beta.  I am permitted to discuss this, I have XBRL Cloud's permission.  I am helping XBRL Cloud understand and implement this web service.  Foundational to the web service is the financial reporting semantics which I have been trying to get people to understand for a number of years.  The semantics are explained in the Financial Report Semantics and Dynamics Theory written by myself and Rene van Egmond who has helped me understand all this technical stuff since the very first XBRL International meeting in 1999. Additional details are provided in our book, Digital Financial Reporting. (Or, you can download the chapters of the book here.)

The fact that every 10-K and 10-Q SEC XBRL financial filing either (a) fits into the semantic model I use or (b) it "loads" into this commercial software and then modeling errors can be clearly seen is pretty significant proof that the Financial Report Semantics and Dynamics Theory is sound. (See the column 'Model Structure Rules').

There are a number of other software vendors who have embraced this model.  Most of them don't want me to talk about this fact at this stage of the game, so I cannot provide names.  But, you will see who is beginning to hide XBRL technical syntax in the background, providing an easier to use semantic layer to accountants creating financial reports.

The result of this can be seen in things like my Financial Reporting Trends tool which I can use for analysis of financial reports.  I contend that this is pretty useful stuff. While Accounting Trends and Techniques has provided a lot of the inspiration for what I have put together, there are other tools which provide the same functionality.  For example, PPC's Guide to Creating Financial Statements is a very similar tool.  I remember when PPC joined XBRL International.  PPC was eventually purchased by ThompsonReuters.

PWC's article about disclosure management refers to the notion of "reporting templates". That is what every SEC XBRL financial filing is, a reporting template.  Some are good, some not so good at the moment.  But they will get better.

Tools used to create financial reports, and folks I am not talking about Microsoft Word, are going to be able to read these reporting templates and import them into tools.  Included in the reporting templates are sophisticated business rules which help software help users get the financial reports from many different aspects: the XBRL technical stuff, but also the financial reporting aspects.

I see this as useful.  Repeat after me, "paradigm shift".  If you are trying to understand all this based on the current financial reporting paradigm, you will never "get it, get it".

Bottom line: XBRL provides benefits not just to analysts, but also to creators of financial reports.

Article originally appeared on XBRL-based structured digital financial reporting (http://xbrl.squarespace.com/).
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