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Disclosure Analysis Prototype

I created a disclosure analysis prototype.  This analysis tool prototype looks at the current inventory components roll up.  It compares the Level 3 Disclosure Text Block representation and the Level 4 Disclosure Detail representation.  You can see and compare the text block and the detail side-by-side.

The rules for the disclosure are useful not only for verifying that disclosures were created correctly, but also for querying information from reports.  I realize this prototype needs more work to make it more useful, I am just trying to get all the basic pieces of the puzzle working.

Currently, the working prototype has information for the S&P 500 companies from their 2016 form 10-K.  All of the information and renderings are provided to me by the XBRL Cloud Edgar Report Information Web Service API.  With permission, I created copies of the renderings, stripped out the detail that you can normally drill down to (you have to subscribe to XBRL Cloud to get that functionality), and use that information to provide the comparisons.

Additionally, you can navigate to the publicly available XBRL Cloud viewer to look at details.  I also link you to the SEC Filing Page of the XBRL-based financial report submission so you can go look at that.

Here are some observations that I have. Of the 500 companies analyzed:

  • 158 companies provide both the Level 3 Disclosure Text Block and Level 4 Disclosure Detail that I would have expected.
  • 189 companies do not provide EITHER the Level 3 Disclosure Text Block OR the Level 4 Disclosure Detail; basically they don't have inventory.
  • 15 companies report the details of components of inventory directly on their balance sheet and therefore per SEC filing rules they are not required to provide the Level 3 Disclosure Text Block
  • 26 companies reported the Level 3 Disclosure Text Block, but I did not find the Level 4 Disclosure Detail.
  • 37 companies reported the Level 4 Disclosure Detail, but I did not find the Level 3 Disclosure Text Block and the company did NOT report the detail in the balance sheet.

What about the other 75?  Well, I am figuring that out.

Here are some specific observations:

  • FLOWSERVE CORP made the mistake of combining the representation of two disclosures into one making the Level 4 Disclosure harder to read.
  • RAYTHEON added an Axis to the facts and then assigned each of the inventory component facts to that Axis, which achieves nothing.
  • Advanced Auto Parts put the inventory components roll up together with the valuation allowance roll forward, making the Level 4 Disclosure Detail harder to read.
  • Allegion plc combined multiple disclosures into their Level 4 Disclosure Detail representation making the representation virtually impossible to comprehend.
  • ANADAKRO PETROLEUM CORP used the general Level 3 Disclosure Text Block, but then used a specialized concept for the total of the inventory components roll forward.
  • DOW CHEMICAL CO created Level 4 Disclosure Detail presentation relations that do not match the Level 3 Disclosure Text Block and they appear to have not created any XBRL calculation relations.
  • Honeywell International uses an different approach to representing the subtotal before the LIFO reserve.  Honeywell uses us-gaap:InventoryGross as the subtotalFMC Technoligies INC uses the same us-gaap:InventoryGross concept, but they use a different LIFO and valuation adjustment concept. FORD uses a different concept than Honeywell.  Dr Pepper Snapple Group, Inc. uses a different concept than Honeywell. DUPONT uses a different concept than Honeywell.  (Huh, I am not sure if these companies are making different disclosures or are providing the same disclosure using inconsistent approaches. More investigation is necessary.)

Anyway, I will leave it at that for the time being.  Interesting stuff.  This would be a great resource for teaching intermediate accounting.

If you have any ideas that would help turn this into a useful tool, be sure to send them my way.

Posted on Thursday, August 3, 2017 at 10:52AM by Registered CommenterCharlie in | CommentsPost a Comment

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