Digital Financial Reporting

The quality of XBRL-based public company financial filings to the SEC again continues to improve.  Now there are nine software vendors and filing agents which are 80% or more consistent with the approximately 22 fundamental accounting concept relations.  Here is the information by software vendor/filing agent:

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And here is the same information broken out by relationship:

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Here is comparison information for July, August, September, and October 2015:

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Great work to the software vendors, filing agents, and public companies who are blazing the digital financial reporting trail!

I am making the switch to Microsoft Azure.  Here are some prototypes:

• SQL Server Database Query
• Applications
• Secure web site
• Unsecure web site
• Access Database Query (HTML)
• Access Database Query (XML)
• Bootstrap

“The difficulty lies not so much in developing new ideas as in escaping from old ones.” (John Maynard Keynes)

The general purpose financial statement (or financial report) has existed for over two millennium. Formats for general purpose financial statements have included clay (see below), paper, word processor documents such as Microsoft Word, PDF, and HTML.  The common thread that all these reports have is that a machine cannot read these reports because the reports are unstructured.

The institution of accountancy needs to create a digital, or structured, version of the general purpose financial statement which is machine-readable.

Annual balance sheet of a State-owned farm, drawned up by the scribe responsible for artisans: detailed account of materials and workdays for a basketry workshop. Clay, ca. 2040 BC.; Wikipedia, Retrieved October 28, 2015.

Financial Statement, Wikipedia, Retrieved October 28, 2015

The digital general purpose financial report is an improvement that helps move the institution of accountancy forward, providing an improvement to that institution. Given today's increasing volume of financial information, complexity of financial information, and importance of financial information; it makes perfect sense to provide such a digital alternative or option.

Financial analysis has been digital for many years; first via the electronic spreadsheet and now with a multitude of options.

With digital books, maps, photos, films, music, blueprints, etc.; what about the digital financial statement does not make sense?  Perhaps I am stating the obvious.

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This is my vision of how a digital financial report would work.

Imagine being being able to pivot a financial report:

https://upload.wikimedia.org/wikipedia/commons/d/d7/8-cell.gif

I created several interesting prototypes.  Check them out.  If you have any feedback or ideas, please send me an email.

• Reporting styles for statement: Shows different reporting styles, lets you compare and contrast different reporting styles.
• Fundamental accounting concept relations 'graphs':  (When I say graph, I don't mean like a 'chart'.  What I mean how the term graph is used in mathematics.)  This lets you see the graph of rules for each reporting style.
• Reporting styles for statements (alternative 2): This is similar to the first bullet above, but it is a different approach to showing the information.
• Each fundamental accounting concept relation: Lets you view each of the fundamental accounting concept relations.  (I think I will redo this similar to the third bullet point, were you can select from a list.
• Improved disclosure viewer: Somewhat of a library of disclosures.
• Improved "report frame" or "reporting style" viewer: A "report frame" is a term I came up with to enable the differentiation in how economic entities report.  You can think of a report fame as a "pallet" or "style" of reporting.  Of the many things in a financial report, each can have alternative approaches to reporting those things.
• Improved fundamental accounting concept relations viewer: An improved approach to viewing the fundamental accounting concept relations.

Again, any feedback would be great.  Always looking for ways to improve things.

The improvement is slow and steady which might not be sexy, but the quality of public company XBRL-based digital financial reports continues to improve.

A second software vendor/filing agent, Merrill, joins DataTracks with over 90% of all of the XBRL-based public company digital financial reports which they create being consistent with all 22 of the basic, common sense fundamental accounting concept relations rules.

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As can be seen in the four month comparison and comparison across individual consistency check:

• Between June 2015 and September 2015, the total number of public company XBRL-based digital financial reports consistent with all 22 of the basic, common sense fundamental accounting concept relations went from 70.6% to 75.8%.
• For the same period, the total number of inconsistencies with those rules dropped from 3,001 to 2,424.
• If you consider each individual consistency check of which there are 150,040; 98.38% of all fundamental accounting concept relations are shown to be consistent with expectation.
• The least consistent rule is 96.3% which means that at least that percentage of the total 6,820 are consistent with the rule. That means only 3.7% are inconsistent with that rule for some reason.

 Comparison across four months:

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 Information per fundamental accounting concept consistency check:

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I don't know if the XBRL US Data Quality Committee is considering adding these basic, common sense fundamental accounting concept relations to their battery of consistency checks.  I would encourage you to ask members of the committee why they would not add these basic common sense rules.