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Detecting Economic Entity or Entity of Focus Update, Insights Obtained

Every financial report is provided for some economic entity or accounting entity. If you cannot find this entity in an SEC XBRL financial filing, you cannot successfully use any information the filing contains. This information is key.

The entity of focus or root reporting entity is detectable in 99.2% of all SEC XBRL financial filings.  This document Understanding Why Root Economic Entity Cannot be Detected summarizes information and provides specific information about why the 52 entities of focus could not be detected in my set of 6,674 SEC XBRL financial filings.

Here is a summary of these reasons these entities were not discovered:

  • Related to reporting entity reporting a successor (using Scenerio [Axis]) (total 14)
  • Related to reporting entity reporting a successor (using Legal Entity [Axis]) (total 1)
  • Related to an error in discovery of the current balance sheet date but was misinterpreted to be a undiscoverable root reporting entity (total 14)
  • Not really an error, zeros reported for all balance sheet fundamental accounting concepts or missing line items (total 11)
  • Inappropriate extension concepts (total 1)
  • Related to reporting of parent holding company (total 4)
  • Related to use of inappropriate concept and statement of net assets  (total 3)
  • Filer used "Audited member" on Scenario Axis (total 1)
  • Filer used "Restatement Adjustment [Member]" on Scenario Axis (total 1)
  • Filer created of Legal Entity [Axis] member to express entity, did not use dei:EntityDomain (total 2)

Two things are worth clarifying.  Bullet three is really an inability to detect the current balance sheet date error. So it is an error, but not the error I thought it was.  To fix the classification of the error I need to adjust the software algorithm a bit.  Bullet four is not really an error either, it just looked like an error because this handful of filers reproted zeros for key pieces of information used to determine if the root entity was detected.  But it does point out some issues with how some things are reported if the value is zero.

On the one hand, these errors are not a huge deal because the number of errors is so small. But on the other hand, this is the basis for all other information in a financial report.

Insight #1: Every financial report is about some economic entity or accounting entity.  These entities come in many different flavors and have different characteristics which are important to understand.

Insight #2: It seems to be better to change the way information is represented in order to make it so the root entity of focus can be discovered than it is to constantly change software algorithms to detect root entities.

Insight #3: Just because a majority of SEC XBRL financial filings are represented in a particular way does not make that way right.

Posted on Tuesday, March 18, 2014 at 11:11AM by Registered CommenterCharlie | CommentsPost a Comment

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