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Understanding Errors in XBRL-based Public Company Filings to SEC

It can be very challenging to understand that something is an error in an XBRL-based public company filing to the SEC.  Software tools for examining such digital financial reports that exist today leave a lot to be desired.  One software tool that provides the comprehensive set of functionality professional accountants need is hard to come by.

What I do to resolve this issues is build my own tools.

Here is a prototype tool that I created that I hope makes a leap toward helping the average accountant understand inconsistencies in XBRL-based public company financial reports for the purpose of correcting those errors.  I am trying to get one or more software vendors to offer this sort of functionality in a commercial tool.

I did not build ALL of this functionally myself.  I am leveraging the XBRL Cloud Viewer and queries provided by 28msec.  What I did that is unique is to combined functionally provided by different software vendors, add some of my own functionality, to get a tool that is closer to what I desire.  It is far from perfect, but it does help one examine digital financial reports and see and understand issues.

To understand the issues, first you must understand that there should NOT be any issues.  For example, here is a query of the balance sheet information for about 100 public companies.  I can do this exact same query on the classifed balance sheet information for 5,293 public companies that report using a classified balance sheet, and 5,042 or 96% of public companies are consistent with my expections.  My expectations are things such as the balance sheet balancing, Total assets = Current assets + Noncurrent assets; Total liabilities = Current liabilities + Noncurrent liabilities; things like that.

I can run another query of the 251 or 4% of public companies that report a classified balance sheet which does NOT meet those expections.  Here is a taste of that, about 70 companies that have inconsistencies.

A good question is: What exactly is the CAUSE of the inconsistencies?  And that is what my prototype helps you see.  Here are THREE common reasons for inconsistencies, all of which are filer errors:

  • Inappropriate use of the concept "us-gaap:AssetsNoncurrent" when the filer should be using the concept "us-gaap:NoncurrentAssets" to represent long-lived assets in the geographic area disclosure. (Example)
  • Inappropriate use of the concept "us-gaap:LiabilitiesNoncurrent" where the filer DID NOT INCLUDE long-term debt in that concept whereas the US GAAP Taxonomy and other filings clearly include long-term debt as part of "us-gaap:LiabilitiesNoncurrent".  Besides, the US GAAP XBRL Taxonomy provides the concept they should have used, "us-gaap:LiabilitiesOtherThanLongtermDebtNoncurrent". (Example)
  • Inadvertantly reversing the concepts used to represent "Equity attributable to parent" and "Equity (including the parent and noncontrolling interest). (Example)

There are other specific causes of inconsistencies.  If someone tells you, "Extensions are the cause of inconsistencies," you can probably assume that because they make general statements like that they don't understand exactly what causes inconsistencies.

If you have any ideas on how to improve my prototype, please let me know.  Why?  Because I am trying to get software vendors to build better tools.  Any help would be greatly appreciated.  You can build your own tools also using the 28msec SECXBRL.info query tools.

Posted on Wednesday, May 11, 2016 at 02:24PM by Registered CommenterCharlie in | CommentsPost a Comment

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