Digital Financial Reporting

This document summarizes information which contributes to resolving four significant areas of confusion within SEC XBRL filings. I have provided for each area of confusion facts and evidence which is helpful in trying to figure each of these issues out. I am doing the best that I can to get formal resolution of these issues.

These four areas of confustion were first brought to light on this blog post. Subsequent to that I created a number of what I call exemplars which clearly articulate the issues and resolutions to the issues. I have shared this information with a number of others who have provided feedback which I have incorporated into this document. You can also get to these same exemplars here.

I would encourage others to provide me any feedback they might have which will help resolve these issues consistently across all SEC XBRL financial filings. Alternatively or in addition, I would encourage you to communicate your views to the FASB and XBRL US. The SEC does not seem like they will provide guidance on this type of issue any time soon, but you may want to point out your view to them also.

A greatly updated/enhanced US GAAP Taxonomy Exemplar/Component viewer is available to dink around with. There are lots of things to check out including:

• View the US GAAP taxonomy components by accounting standards codification.
• A sample/prototype applicationfor showing you how to grab pieces of the US GAAP taxonomy within a software application. (NOTE: This is an Excel spreadsheet which contains macros.)
• Remember the Four Areas of Confusion I pointed out.  Here are exemplars which show you options for modeling those pieces of an SEC XBRL filing.
• Connected the XBRL Techniques and Trends Prototypes to this prototype so they are easier to find.
• Broke the larger pieces of the US GAAP Taxonomy into physically smaller pieces to make focusing on a piece easier.
• Renamed the RDF files to be consistent with the terminology used elsewhere.
• Other enhancements.

It is helpful to read this blog post to understand the components I see and to better understand my prototype.

So what is the point of all this?  Well, there are four primary points:

1. Possibilities. This is what using the US GAAP Taxonomy COULD be like. I admit I am not a very good programmer, but I think I am showing some things which could be quite useful to business users.
2. An approach. You cannot easily automatically reorganize the US GAAP Taxonomy as it stands today like I can construct reorganizations.  The reason is that I put in a lot of manual effort to put the consistency into my reorganized version of the US GAAP taxonomy which I needed in order to provide these reorganizations.  If you find these types of organizations useful and feel constrained by the current US GAAP Taxonomy organization, point this out to the FASB.  Ask them to be more explicitly and more consistent.
3. Meta data.  I have added only some meta data to the taxonomy using RDF.  Eventually others will realize the possibilities here.  What can be added is endless really. This meta data will make things even easier.
4. Maintenance.  I contend that maintenance required of software vendors, and the FASB for that matter, when it comes to periodic updates of the US GAAP Taxonomy is made easier by more consistency and explicitness in the taxonomy.

Keep in mind that these ideas are not limited to the US GAAP Taxonomy but are rather practices which will serve any taxonomy one might desire to create.

I realized this weekend that I was looking at something incorrectly. Fact its, I have been looking for a more detailed way to break apart the US GAAP Taxonomy and it had been there all the time, I was not looking at it correctly.  What I did this weekend on my little Exemplars and XBRL Techniques and Trends project helped me realize my mistake.

This link will take you directly to a specific page in my Exemplar viewer. It is the same viewer, just a short cut to a specific contents page.

The piece I had been looking at incorrectly is what I now call the "Component". I used to look at this as an "information model", but an information model is a characteristic of a component. Let me define "Component" in the context of the other pieces in the US GAAP Taxonomy:

• Network: Networks are over rated right now because the SEC interactive data viewer uses them to put pieces of an SEC XBRL filing in certain places using networks. In reality, networks are more syntax than semantics. Networks are needed to separate conflicts which would otherwise occur should they not exist.  People will realize that it is best to ignore this syntax and use other ways to organize the pieces of an XBRL taxonomy.  (Note below how the frame work organizes a flow of the Tables.)
• Table: A Table is an organization of components or concepts which go together in some way for some purpose and share the same [Axis]. What the Table contains or needs to contain defines the table.  Every table should be unique.
• Component: A component is a piece of a Table. A component has an information model, a component is modeled in a specific way.  It could be a [Roll Forward], a [Roll Up], a [Hierarchy], an [Adjustment], a [Grid], a [Text Block].  Maybe more information models will be discovered, but I could model all relations by one of these models as the US GAAP Taxonomy stands today. (Note that [Abstract] is NOT an information model.  My viewer shows two of these, but they are errors and shown to make a point.)
• Concept: A component is made up of concepts.  A concept is the lowest building block of a taxonomy.  Concepts are organized into components.  Components are expressed within a Table.

There is one more term I am using, I really don't particularly care for the term, I am looking for a better term.  But as it stands now, the term I use is "Framework".  A framework some sort of organization of the pieces of the taxonomy, the Tables, Components, Concepts.

In my example, the framework I used is based on the Accounting Standards Codification(ASC).  But I modified those "Topics" to suit my needs a little better.  This is a rendering of that framework with the Tables of the US GAAP Taxonomy "mapped" to each topic. There are other organizations of the information. A "pure" ASC organization, by the Accounting Trends and Techniques table of contents, by the Wiley US GAAP Guide table of concepts, by some industry specific organization, by some disclosure checklist, or by a company's preferred organization.

If you look at the HTML rendering of the framework (the link above), you will notice that it looks a lot like the XBRL taxonomy renderings.  That is becuase it is expressed as an XBRL taxonomy.  Here are the relationships expressed as an XML info set of the business reporting logical model.  I have this expressed in RDF also.  What is the point? The XML and RDF is readable by a computer application.  You can read all this stuff into a software application.  Changing the configuration is as easy as creating presentation relations in an XBRL taxonomy.  This is better done using an XBRL definition linkbase because you can assign roles to better explain the relations.

All this is there.  If the US GAAP Taxonomy were organized in this manner in the first place and if it were more consistent, no one would have to go through all the work I am having to go through to make it consistent and organized in a more reusable form.

If you don't see the difference between my organiztion of select sections of the US GAAP taxonomy and the official "as published" version, compare the two.  The differences will become evident.  Here is an HTML rendering of most of the commercial and industrial companies entry pointof the 2011 US GAAP Taxonomy you can use to come my reorgnaized version with the origional version.

I am not sure why I did not think of creating these exemplars sooner, but I am getting increasingly happy with how helpful they are in resolving some of the issues I am seeing. You can check these exemplars out by going to the link above and clicking on"Show Specific Examples". What you will see is a number of links.  These links takes you two the three specific pages provided below.  Right now I am focusing on the balance sheet, income statement, and cash flow statement. Data referred to comes from an analysis I performedon 1474 SEC XBRL filings.

• Balance sheet: Two balance sheets are modeled, one with a noncontrolling interest and the other without a noncontrolling interest.  The point of this is to show which concept should be used for equity under each scenario. Those creating filings are using one of the two equity accounts shown.  The point is, everyone should be using the SAME concept to model total equity. These exemplars show the answer.  The rational for the choice is this: why would having or not having a noncontrolling interest impact the concept for for "Equity"?  The concept for "Stockholders' Equity Attributable to Parent" is a subtotal, used if you have a noncontrolling interest.  If you do have a noncontrolling interest no issue exists because you have to use both concepts.  The problem exists only if you do not have a noncontrolling interest.
• Cash flow statement: The question on the cash flow statement is when should the concept which specifically identifies ", ....Continuing Operations" be used such as "Net Cash Provided by (Used in) Operating Activities, Continuing Operations" as opposed to "Net Cash Provided by (Used in) Operating Activities". Similar cases exist for operating, financing, and investing activities. If you have discontinued operations how things should be modeled is clear.  But if you don't, then the question is model QQQ appropriate?  Most filers model their cash flow statements like QQQ, but it does not specifically state that cash flows are from continuing operations.
• Income statement: If you are a filer and you have income from equity method investments, extraordinary items, discontinued operations, a noncontrolling interest, preferred dividends, and you pay income taxes; then how to model the income statement is clear.  But, who has all that stuff? If you turn this around and if you only have income taxes (we all have to pay the tax man) figuring out what concepts to use can be challenging. Exemplar BBB shows how this should be modeled if you have what amounts to "Income (Loss) from Continuing Operations Before Taxes", "Income Tax Expense (Benefit)" and "Net Income (Loss)". Exemplar CCC shows how to model things if you add a net income from a noncontrolling interest.  Exemplar DDD shows a "flat" organization of CCC.  Exemplar EEE shows adding discontinued operations.  Exemplar FFF shows adding preferred dividends.

NOTE!!! I am not yet ready to hold these out as undisputed examples, but hopefully I will get to that point.  I am discussing these issues with others at this point.  Those discussions are getting closer and closer to a consensus, but we are not there yet.

Do you have an opintion? Post a comment or email me (CharlesHoffman@olywa.net).

So of course you are asking, "What the heck is an exemplar?"  Well go to this web page and click on "Show Specific Examples", those are exemplars. An exemplar is a $50 word for example. When I was trying to figure out the right word to use, I considered these three terms:

• Exemplar: A model or pattern to be copied or imitated.  A typical example or instance.  An original or archetype.
• Archetype: The original pattern or model from which all things of the same kind are copied or on which they are based; a model or first form; prototype.
• Prototype: The original or model on which something is based or formed. Someone or something that serves to illustrate the typical qualities of a class; model; exemplar.

The three definitions seem a bit circular, each one referencing the other. Reading all three gives you a really good idea of what an exemplar is and why these might be quite useful for the creation of SEC XBRL financial filings. Think of an exemplar as an "undisputed example".

Reading the US GAAP Taxonomy itself will not help you create a proper SEC XBRL filing. The taxonomy takes exactly the opposite approach of what is needed in my view. It packs every option into one model and you have to figure out which one to use from that.

Looking at other SEC XBRL financial filings can be helpful, but today it is hard to differentiate a good filing from a not-so-good filing.  Eventually I see actual filing serviing as models.  This is just like Accounting Trends and Techniques is used today (or how my XBRL Trends and Techniques will be used eventually).

Granted, it is just a start. And I won't hold these out as "undisputed" just yet.  But if you consider these two small balance sheet samples, you will see why this is useful. In my analysis of 1474 SEC XBRL filingsI noticed that, throwing out filers who used partners' capital and the ones which were obviously incorrect, 732 of the filings used "us-gaap:StockholdersEquityIncludingPortionAttributableToNoncontrollingInterest" to express total equity and 596 used the concept "us-gaap:StockholdersEquity".  Now, don't jump to any conclusions by looking at the concept name. Names are meaningless.  What matters is first the definition, second the references and third to a smaller degree the label of the concept.  But, those numbers are rather close all things considered.  Perhaps they simply flipped a coin.

There is way more variabilty on the income statement. Now, if you have preferred stock and pay dividends, have a noncontrolling interest, have discontinued operations, have an extraordinary item, have an equity method investment and pay taxes; then it is pretty easy to figure out what concepts to use on your income statement.  But now look at this from the other perspective and how you might assign concepts to in your SEC XBRL financial filing if you had none of those.  Or what about the various possible permutations and combinations.

Eventually we will have undisputed examples, exemplars, of the right way to create SEC XBRL financial filings.  Until then, be careful.