Digital Financial Reporting

One of the best compliments which anyone ever paid me was, "Charlie, you create elegant XBRL taxonomies." Elegant XBRL taxonomies.  Think of it! Who would have ever thought to use those two words together in the same sentence.

Yes, XBRL taxonomies can be elegant. Just as the elegance of the iPhone changed the fundamental nature of smart phones in general; understanding and creating elegant XBRL taxonomies will change the nature of digital financial reporting.

Here is one example: disclosures which run together.  Consider this fairly basic example of an SEC XBRL financial report disclosure for inventory:

That representation results in a rendering which looks like this in the SEC interactive data viewer:

Notice how what amounts to a roll up of the inventory components and the "long-term material purchase obligations" runs together. This is a very, very basic example to make the point clearly.  Imagine larger disclosures which run together and cause incomprehensible renderings of disclosure information.

Here is a rendering of the exact same information in the XBRL Cloud Viewer (click here to go to the actual filing):

Now, what if the representation of the disclosure was changed slightly in the SEC filer's taxonomy.  Say to something like the following:

No drastic changes and certainly no change in the meaning of the information communicated.  But look how the two individual pieces now stand out in the representation rather than running together. Just like paragraphs and sections within a document make reading the document easier, a well constructed XBRL taxonomy makes understanding the digital financial information easier.

I fiddled with the XBRL Cloud viewer and made it simulate the representation above (i.e. I did not re-represent the information):

See how that makes understanding the information easier?

Here is a more complex disclosure which appears to me to have three sections which all run together to create a hard to read SEC interactive data rendering:

Empty cells is a good sign of run in information, notice all the empty cells above. Notice how the yellow block of information seems to be a good candidate for a separate representation. You can have a look at the rendering and the representation (model structure) here via the XBRL Cloud Viewer.

Generally, many smaller focused sections are better than fewer sections which pack together information but then make that information hard to read. Breaking up a larger section by the well-thought-out placement of some [Abstract] concepts helps organize your representation so that those analyzing your information have an easier time of it.