Digital Financial Reporting

This is one of the most interesting working prototypes that I have created. What is so interesting is that you can drill down from the primary financial statements, to the roll forward provide for EVERY balance sheet account, to the subclassifications roll up provided for most accounts, to the trial balance summary, to the changes summary (i.e. summary of changes by change category), and ultimately to the journal entries that caused the change in a account.

Here is a video that shows the drilldown and drillup functionality. (Note that the XBRL Cloud evidence package provided does not support "drill down" functionality but the XBRL Cloud viewer does.  Pesseract does support drilldown.

So how does the drilldown/up work?  For the statements, when a fact is shared between two report fragments the fragments are "hooked together" by that fact.  For example, the line item "Property, Plant and Equipment" on the balance sheet is also the beginning and ending balance of the Property, Plant, and Equipment Roll Forward and the total of the breakdown of Property, Plant and Equipment subclassifications.

But how do you get to the journal transactions?

Basically, every balance sheet account has a roll forward which can be created.  Most accountants don't look at it this way because clearly you don't disclose a roll forward for every balance sheet account in your external financial statements.  But think about this differently.  Think about this in terms of your internal financial statement.

Every accountant understands the notion of a trial balance. 

The trial balance is a listing of the "real accounts".  A "real account" is a balance sheet account, it is either an asset, a liability, or equity.  (See Elements of Financial Statements.) Nominal accounts are the revenues, expenses, gains, and losses that are reported on the income statement and then ultimately run through the equity roll forward when you close your trial balance. This is the "articulation" of the four statement model.

Every accountant knows that if you add up all the real accounts in the trial balance the total of all the accounts will add up to ZERO when you consider the DEBITS and the CREDITS.

What about if you added up all the TRANSACTIONS?  Every transaction balances, debits equal credits.  And so, it is also true that the sum of all the transactions will equal zero.

What if you grouped each transaction not by the chart of accounts account that is impacted, but rather by the change that the transaction causes.

That is what the change summary shows. Rather than grouping transactions by the chart of accounts code, you create a code to represent where they would show up in the account roll forward of each account.  I discussed this in the documents Introduction to the Fact Ledger and General Ledger Trial Balance to External Financial Report.

So what you do is code each transaction with one of those change summary codes and then you can drill down from a balance sheet account, to the roll forward for that account, and from the roll foward change that you want to look at all the way back to the journal entries that show the transactions that comprised that change.

You will note something in the change summay.  You will see the change code "Repayment of Long-term Borrowings" and "Repayment of Long-term Borrowings 2".  Remember that accounting is double entry, every transaction will show up in TWO roll forwards.  So, one part of the transaction is the cash that was used to repay long-term debt; the other part of the transaction is the actual reduction of long-term debt becaue of the cash repayment.  This is normal.  I will create better transaction code names.

Here is the initial prototype of the journal entries. The volume of journal entries is not high but it demonstrates the idea effectively.

More to come so stay tuned.