Digital Financial Reporting

I have been struggling and struggling trying to figure out the best way to communicate some things I have been trying to communicate and have settled on a number of model SEC XBRL filings to articulate the message.  You can find the first model SEC XBRL filing here. (If the site is slow, check back; the hosting people are doing an upgrade or something and the site has been slow.)

The key thing that I am trying to achieve is to show CPAs how to correctly model an SEC XBRL filing from an information model integrity perspective. The message is that:

• the balance sheet, income statement, cash flow statement, statement of changes in equity are tightly intertwined
• the policies and disclosures provided details which sometimes are stand alone, but sometimes are details of the aggregated summaries on those primary financials
• properly expressing these relationships from an information modeling perspective allows for features such as "drill down" and moving from one area of the statement to another area
• paper-based and document centric notions such as "presented on the face of the financials" get in the way of getting the most from XBRL

We are rapidly moving from the two dimensional medium of paper and electronic paper to a more feature rich model which leverages things like the multidimensional model. I have heard a few people use the term "model driven reporting".

What I am trying to do is point to specific issues in order to highlight the issues so CPAs and others in the financial reporting supply chain can figure out the best way to apply XBRL to financial reporting.  How XBRL is used is a choice. Information about the possibilities helps get to the appropriate answers, all things considered.

So, I am creating a series of model SEC XBRL financial filings to point out some things. I am starting with a "semi well modelled XBRL SEC filing" to make some specific points.  That is the model above.

This PDF file describes the model SEC XBRL filing.  It provides a narrative which shows how things are tied together and certain choices which must be made by SEC XBRL filing creators.  I submitted the model to the SEC Previewer which shows the resulting renderings.

You can make your own way through the model, here are some suggestions on getting the most of the model and the key points I want to articulate:

• The financials are intertwined.  This XBRL formulas validation report results shows how interrelated. You can go look at the XBRL formulas themselves, but they can be hard to read without a good application.
• Look at the financial as the interrelated fact tablesthat they are. The meta data of one fact table needs to correctly relate to other fact tables in order for the validation report to show no errors.  Every SEC XBRL filing needs to be properly articulated for the information in the filing to be useful.
• Properly articulated information results in properly rendered SEC XBRL filings. Walk through this Excel spreadsheet to see how a fact table is turned into a human readable rendering.
• These relations will be much easier to see when good software exists for viewing and comparing SEC XBRL filings.  By looking at these details you can see the impact.  If you are not comfortable at the detail level of XBRL, try and use the Firefox XBRL viewer addon to read the XBRL instance. It does not render the model very well, but it does show you some of the drill down capabilities and how a financial report will be more dynamic in the future.
• Go grab the ZIP file (line "I") from the model's home page and run it through the SEC previewer yourself.  Edit the XBRL taxonomy and XBRL instance and see how the SEC previewer rendering changes. Notice how the rendering is better if you have many small pieces rather then fewer larger pieces.

(Note that this model consciously points to some label linkbases where others should be used for an actual SEC filing.  I have to do this due to the taxonomy editing software I am using.  That causes one EFM validation error, I realize that. The final version will have that adjusted to use the proper label linkbase files.)

Many people I talk to are surprised when I tell them that XBRL is not just for financial information, that it can be used for other business information, any information in fact. While there are pros and cons to using XBRL and it is not right for everything, its utility goes beyond financial reporting.

I talked about XBRL's sweet spot in another blog post, I will summarize that sweet spot here:

• Larger transactions which tend to change (i.e. such as a 50 or 100 page regulatory report with perhaps thousands of facts exchanged, as opposed to a small transaction with 10 data points)
• Zero tolerance for errors in the information (i.e. everything must tick and tie and if things don't add up, bad things happen)
• Information which needs to be reconfigured(i.e. not a form, although XBRL can be used to expressed what amounts to a form, it excels when that "form" needs some flexibility)
• Business people changing the metadata, no IT involvement required (i.e. XBRL has a good balance between power and ease of use)

No why are the examples I createmostly related to financial reporting? Well, a couple of reasons. First, I am a CPA so that is my domain of expertise. Second, I am a CPA and I want to help the financial reporting domain figure out XBRL in order to use it effectively within that domain. Third, it does have a lot of uptake in terms of using XBRL.

I do create non-financial reporting examples.  See the "State Fact Book Prototype" which I created.  Also, this may seem strange but have a look at it. Here is a non-financial reporting example.  Visualize this by looking at the PDF.  I am using placeholder text use for prototyping marketing information for the concepts expressed in the XBRL taxonomy and reported in the XBRL instance.  It still works.  No debits or credits, no balance sheets or income statements, not financial reporting related.

When you look at the business use cases forget about the specifics of what you see in the use cases. Just like mathematics is used in accounting and engineering and physics and medicine and whatever domain; those patterns of what I am expressing goes beyond financial reporting. Look at the examples in more general terms.  I thought about creating 100 non-financial reporting uses for XBRL, which I still may do one day.  For now, I am focused on financial reporting and figuring out how to best use XBRL in that environment.