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Updated Reference Implementation of XBRL-based Filing to SEC

I have updated what I call my reference implementation of an XBRL-based public company financial filing to the SEC.  You can get to the new reference implementation here.  There you will find a high quality example of an XBRL-based digital financial report with complete human-readable and machine-readable documentation.

If you gave the exact same financial information about one economic entity to ten different professional accountants; you would expect that all ten accountants would create a fairly similar financial statement for that economic entity.  Each professional accountant would represent that financial information similarly in a set of financial statements in all material respects.  Each accountant would create a true and fair representation of the economic entity's financial information in the financial statement they created.  That is true whether the information is formatted in HTML or PDF or Word or XBRL. Right?

Try that experiment with an XBRL-based financial report.  How do you think that might turn out?

How would you define "correct" or "best modeling approach"?  This is how I defined correct for my reference implementation:

  • Every model structure is logical and consistent.  There are no inconsistent and therefore perhaps confusing or potentially misinterpreted modeling situations.  All pieces of the model structure act consistently and how they interact with other pieces is well understood and predictable.
  • Every computation is expressed and proven to work correctlyEvery computation must be proven to work correctly by passing one or more business rules.  If a computation relation exists and it is not expressed, then there is no way to tell if the computation works correctly per the XBRL medium.
  • No duplicate facts.  Duplicate facts result from modeling errors and therefore should not exist.
  • All reported information is consistent and does not contradict other information.  If there is no specific reason for an inconsistency which can be articulated which justifies the inconsistency or contradiction; then you are being inconsistent and one of the approaches must be dropped.  Each report fragment should be correct and should interact appropriately with other report fragments.
  • Each property is correct.  Each property of any component, fact, report element, or parenthetical explanation must be correct from a business meaning or semantics perspective.
  • Meaning can be logically explained to a business professional.  The meaning of each and every aspect of the digital financial report can be explained, logically, to a business professional.  If the meaning cannot be explained, then it cannot be considered to be correct.
  • True and fair representation of financial information.  Overall, the financial report needs to work.  In all other ways the information expressed is correct, complete, accurate, and consistent.

If how to create a digital financial report is not well understood, then XBRL-based digital financial reports will never be usable. A digital alternative for a general purpose financial report will not magically appear. What a digital financial report ends up being will come from deliberate effort, skillful execution, and rigorous testing.

The documentation of the reference implementation will help software vendors understand digital financial reports.  All the files are there for software vendors to use for testing.

Check out the reference implementation.  Understand digital financial reports by analyzing and experimenting.  It is through this analysis and experimentation that professional accountants will understand how to make digital financial reports work reliably and predictably.

Posted on Monday, April 25, 2016 at 07:30AM by Registered CommenterCharlie in | CommentsPost a Comment

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