Digital Financial Reporting

All to often, XBRL is seen as simply something they may need to file with the SEC because they have to.  Here is an example of why this view is mistaken.  Consider the following screen shot:

I remember back when I was in college trying to understand how to compute the present value of net minimum payments under capital leases.  Intermediate Accounting was the class where I was exposed to this.  I sort of got this then, enough to pass the class at least, and enough to pass the CPA exam.  But look at this image above.  How helpful is that, which is a tree presentation of what is in the US GAAP Taxonomy, at understanding how the present value of net minimum payments is calculated?  I say quite helpful.

Now, I don't know about you, but (a) I am not very good at memorizing all this stuff and (b) frankly, I would consider myself a pretty average (at best) accountant. This stuff has been a HUGE help in understanding accounting.  All laid out for you.

Another point is that I was fortunate enough to participate in the creation of both the US GAAP Taxonomy and the IFRS Taxonomy.  (This was a great exposure into the world of IFRS for me).  I noticed during the creation of the taxonomy that (a) the accountants did not always agree where things were supposed to go, at least at first, (b) may times people had their understandings incorrect.  The best example of this was the creation of the income statement with all those "steps" toward arriving at "Net Income" (extraordinary items, discontinued operations, cumulative impact of accounting changes, and all that stuff).  People would get those in the wrong order.

Particular for average accountants like me, the UGT is quite a reference resource.  Even if you never use it to report a financial statement using XBRL, the UGT basically allows average accountants to more easily understand all this stuff.  And for accounting students, it seems to me this is even better!

A document called US GAAP Taxonomy - Tips, Tricks, and Traps is available here on this blog.  On that page there is an abstract of the document.  In summary, the document provides:

• A framework for understanding the US GAAP Taxonomy.
• Tips, tricks, and traps which relate to the entire taxonomy.
• Tips, tricks, and traps which relate to each network (extended link) within the taxonomy.  Of the approximately 60 extended links in the commercial and industrial companies entry point, 32 of those networks are completed.

The document was created by Christine Tan and myself.  Both of us worked on the US GAAP Taxonomy project team.  In talking to others who were trying to understand the taxonomy we heard that they really did not know where to start.  We believe that is document provides an excellent starting point.

More information is available on the page noted above.

UBmatrix has provided a number of video presentations which explain what XBRL is from the perspective of a business user.  These videos can be found here.

The first video "SEC Mandate and Beyond" provides three perspectives: A thougth leader perspective, a legal perspective, and a CFO perspective.

There are many different ways to view the US GAAP Taxonomy (Version 1.0).  Just looking at the set of files is not what XBRL is all about.  Rendering the information within those files is much more interesting to business users.  Eventually, these applications will get better and better. This is a summary of many of those ways (if you know of other viewers, email me and I will add them to the list):

• Official Version:  This is the official version of the UGT.  You can basically browse the file structure, grab a file.  This is not really that useful to business users, but you can use this to see what is going on behind the scenes.  Software applications will likely grab files from here, cache them on your local machine to improve performance.
• Download:  You can download a copy and use the local version here.
• Viewer Application:  Here, you can view the taxonomy within a viewer application.  Hopefully, lots and lots of these types of applications will appear with increasingly better interfaces.
• Another Viewer Application: This is another viewer application.
• Excel:  This is an Excel spreadsheet which has the CI entry point loaded in it.  You can use the features of Excel to sort, search, etc.
• The Future:  This is not the US GAAP Taxonomy, but imagine an interface which looks like this.  This is slick!  (Developers, note the source code which is provided. Come up with something interesting and email me a link and I will reference what you created).

Each of these options has its pros and cons.  What is the coolest is that there is a possibility to do this because of XBRL.  If the US GAAP Taxonomy was in the form of a piece of paper, a PDF file, or even a set of HTML pages on a web site; repurposing the taxonomy would be significantly hard or flat out impossible.

What I look forward to is being able to do the same thing with the thousands of SEC filings which will be appearing over the coming years!

This is one of the coolest and most useful features I have seen in a LONG time! 

Check this out.  Click on this link, and it will take you directly to a US GAAP Taxonomy concept "Cash" within a library of taxonomies.  Now, this link is a bit of a mouthful, but you can use http://www.tinyurl.com to convert the link to this.

Hat's off to CoreFiling for this feature.  This goes to show that software vendors may be getting close to being over the "hump" where they have been investing in XBRL infrastructure which is needed to make use of XBRL, and we are moving into an era of business user features, showing the true power of XBRL.

I mean, really think about this.  Imagine being able to link from one vendor's software application into a different vendor's software application, just because of XBRL.  Imagine an investor looking at a financial statement using interactive data being able to link into the taxonomy library, or a different library, or perhaps they could choose between several different renderings of the taxonomy, based on what they wanted to achieve at the time; directly from the financial statement.  The possibilities are endless!