Digital Financial Reporting

SEC Calls Again for Corrections in XBRL Filings.

Patience with repetitive, simple errors in XBRL filings is wearing thin at the Securities and Exchange Commission.

“Limited liability applies only to filers who make good faith efforts to comply with the rules and who promptly correct errors when they are made aware of them.”

“They have widespread skepticism about the reliability or usability of the data,” she said, in part because they see how commonly it contains errors. “It harms their ability to analyze your companies accurately.”

I am in the final stages of brainstorming and testing my next iteration tool which helps me take a look at the SEC XBRL filings.  Here is a shell of that interface with a small subset of the entire filings which I am using for some final testing which I wanted to make available to my blog readers. 

There are three "view" into the information listed below.  There are three web sites where this information comes from: the SEC, XBRL Cloud, and information I generate. All this information is pre-processed, nothing is regenerated when you visit the page.  I generated the information and interfaces using the UBmatrix XPE XBRL processing engine, the Coyote Reporting XRun application which I received as a result of working on the US GAAP Taxonomy creation project, and Microsoft Access which is my preferred programming tool.  I use these three tools to process information and then generate the XML and HTML files which contain the information. You can download all these files and use them locally by grabbing this ZIP file. (Again, this contains only a subset of 16 filings.  My analysis will be for about 400 filings.)

Here is a breakdown of the different interfaces into this information:

• By topic.  The first view is by topic. It allows you to focus on one topic.  For example, if you wanted to take a look at the calculations validation of an SEC filing, you can use line item number (6) XBRL Calculations Validation Reports on that list. That takes you to a list of all the calculation reports for each filer.
• By file.  This is item (4) on the above list, but worth pointing out. Basically this is a matrix of every filer and every file available from whatever source.  Look down the left side of the report for a filer, the columns for the report, and the intersection "cell" contains the report you might like to take a look at.
• By filer. What this does is take a bunch of the relevant files and organizes time into a tabbed interface and lets you look at all the reports for one filer in one interface.  You can basically focus on one filer here.

I am learning a lot about using XBRL from digging into these SEC filings.  Like is said, there are two ways to learn: from making your own mistakes and from the mistakes of others. Digging into these filings really helps one learn about both the right ways and wrong ways to use XBRL.  And this is not just related to creating XBRL.  There is also a lot to be learned about building a system such as what the SEC has built, what works well and what does not.  There is a lot to learn related to creating XBRL, best practices, and so forth.  There is a lot for software vendors to learn from this in terms of features they need to provide or can provide to help filers and others. There is likewise a lot there which helps accountants and auditors who have to check over these filings.

What I think I am going to do is publish a comprehensive analysis of these filings which others in the groups mentioned above can use to learn more about XBRL.

A study (A Comparison of XBRL Filings to Corporate 10-Ks - Evidence from the Voluntary Filing Program) finds what they call serious errors in XBRL filings to the SEC Voluntary Filing Program (VFP).

Here is the abstract of the research paper:

The SEC has mandated a phase-in of XBRL filings beginning June 2009 for accelerated filers. Although companies have limited legal liability for initial filings, registrants may suffer reputational and other risks should the filings include errors. To assess the likelihood of material errors, we evaluate the accuracy of XBRL filings for 22 companies participating in the SEC.s voluntary filing program in 2006. Results of a comparison of XBRL filings to Forms 10-K reveal multiple errors in signage, amounts, labeling, and classification. These errors are serious because since XBRL data is computer-readable, users will not visually recognize the errors, especially when using XBRL analysis software. Although XBRL software and taxonomy have improved since 2006, the potential for some errors remains. The SEC, registrants, and accountants need to take note of the complexities of XBRL tagging and identify solutions (e.g., assurance, training) to ensure successful adoption.

 The general types of error discovered and reported in this study includes:

• Missing elements and amounts
• Incorrect amounts
• Sign flips (i.e. reported as a positive when it should be a negative value as an example)
• Duplication of items
• Incorrect classifications
• Incorrect tagging (labeling)

The VFP did not really do a lot in the way of validating submissions.  Nor did the SEC seem to crack down on people whose submissions contained errors.  This probably will not be the case for the real filing companies make to the SEC.  I would suspect that significantly more robust processes will be wrapped around "real" submissions.

Further, the AICPA has issued a statement of position (SOP 09-1) titled Performing Agreed-Upon Procedures Engagements That Address the Completeness, Accuracy, or Consistency of XBRL-Tagged Data.  This guidance did not exist during the time that these VFP filings were made.  It does now.  This will contribute to improving the quality of the filings, at least if CPAs are involved in the process as they need to follow this guidance.  While the SOP does not tell you how to create a good XBRL instance, it does help to define "good" by pointing out the things which are not good.

Anyone responsible for creating XBRL instances, whether for SEC filings or any other types of XBRL instances, would benefit from reading this paper.  It helps you understand the types of things to look for when reviewing an XBRL instance of any type.