Digital Financial Reporting

Just like [Line Items] have patterns or information models such as [Roll Forward], [Roll Up], and [Hierarchy], the [Member]s of an [Axis] likewise have an information model. I have put together a document which summarizes these moving pieces which you can get here.

Here are some example financial reporting use cases which show different types of dimensional aggregation schemes which will give you an I deal of what I am talking about:

• [Axis] with no aggregation: Subsequent events or property, plant, and equipment policies would be an example of where you would have an [Axis] with no aggregation. Subsequent events are rarely, if ever, added up to arrive at some total amount for subsequent events of an entity.  The same with PPE policies, they are not added up.
• [Axis] with basic aggregation: Nonmonetary transactions are a good example of a basic aggregation. There is no real grouping of nonmonetary transactions, it is simply a flat list.  That list has an amount of for each nonmonetary transaction, and the total for nonmonetary transactions is commonly reported. That total does not tie to any other location in the financial report, it stands alone.
• [Axis] with complex aggregation: Business segment reporting is a good example of potentially complex aggregation. You may have a Parent Holding Company [Domain], which has consolidation eliminations, and multiple business segments.  You may add to this a breakdown of continuing and discontinued segments. This could become even more complex with asset groups, reporting units, and disposal groups.

As the XBRL Dimensions Specification does not address dimensional aggregation, taxonomy creators are on their own to address this.  Fortunately, XBRL Formulas is available to articulate and validate against aggregation schemes.

In order to create these aggregations, a good understanding of what a domain is becomes important.

See the document for more information if you care to understand and eventually master this area.

Thank you to all the XBRL Dimensions heavy weights who contributed to my understanding of this important information.

Someone said something to me today which helped me recall something which I had thought about years ago when I had an opportunity to visit a Fortune 100 company to see how they created their financial statement.

The thing which sparked this thought again was a chiropractor who was going through the process of implementing electronic medical records.  She was telling me that her macros were not working how she wanted them to work when she did initial examinations of a patient. She said she needed to make adjustments to her macros. You may not be familiar with the SOAP (subjective, objective, assessment, plan) method of documentation employed by health care providers, and that specific process is not really relevant here.

What is relevant is this.  First, a chiropractor adjusting her macros. Who would have thought a chiropractor would ever even use macros.  Second, there is a process and that process can be converted from manual medical records to electronic medical records.  Third, that SOAP process can make use of templates.  There are thousands of diagnosis codes and procedures employed to treat medical conditions. These can be distilled down to templates.  I would contend that there is a lot of similarity between electronic medical records and financial statements. There are likewise lots of different types of financial statement disclosures which can be distilled down into templates.  (i.e. neither medical records nor financial statements are totally random)

So imagine breaking down a financial statement into its components.  Here is one instantiation of a financial statement broken down into its components.  That is created from an XBRL processor.  Then, once all the components are correct, running a macro to generate a financial statement in HTML and/or XBRL or any other format for that matter. Creating a financial is adjusting templates, running macros, and repeating this until your financial is complete.  Business rules enforce the integrity within and between components.  All that ugly XBRL stuff is hidden deep within the software, but that is what enables the macros to do their job reliably.

I can imagine pretty easily careating something like this in Excel.  Longer term, I don't see Excel as the platform for creating financial statements. I see something like GoAnimate as an example of how the application might work. The point here is to look at the process totally differently than it is being looked at today. Think model based reporting.

That is what seems to be in store for the last mile of finance, generating those financial reports. The process seems to be taking lots of little pieces and putting the pieces together. Why cut and paste when you can have a macro do the work.

The FASB made an announcement and the SEC has now put on its web sitethe 2011 US GAAP Taxonomy making it allowed for use for SEC XBRL filings.

I submitted a test filing to the SEC previewer yesterday which used the 2011 US GAAP taxonomy which was accepted.

This blog postpoints to a number of resources which are helpful in using this new taxonomy.  In particular check out the reference implementation, the reorganized version of select portions of the 2011 taxonomy, and the SEC XBRL Filing Primer.

I mentioned how interesting and useful what I called "hypercube jumping" is, which the Firefox XBRL Viewer add on provides, in a prior post on my blog. In another blog post I pointed you to a sample XBRL business report which is well modeled so you can experience this for yourself. Just in case you don't want to install the Firefox XBRL add on but you do want to see what I am talking about, here is a one minute video screen capture which shows this "hypercube jumping" in action.

Many SEC XBRL filings are also worth trying out. Here are two which I have played with: Apple and Carnival. Try right clicking on the balance sheet line items and see which networks you can jump to. Or try net income on the income statement, that usually has a number of places which it is linked to.

And don't forget about the ability to reconfigure the information. Experiment with that, notice what is going on. (Here are some small samples which you can use to experiment with. Although, the hypercube jumping won't be that great because these isolated examples.)

While both the "hypercube jumping" and reconfiguring the information leaves a lot to be desired, if you really think about what it going on it is pretty useful.

But "hypercube jumping" is not the right term to describe what is going on. I don't know what to call it yet, but here are some clues that some other term is more appropriate to describe what is going on. (If you wanted to follow along, I am using this sample SEC XBRL filing to experiment with, grab the XBRL instance and try these for yourself):

• Dimensions or [Axis] jumping. If you go to the balance sheet and right click on the "Report Date [Axis]" or the "Legal Entity [Axis]" (on the top part of the rendering) you see a list of all the networks which contain hypercubes (SEC XBRL filings call these [Table]s) which use those [Axis].  So, it seems you can also jump from place to place in the report using [Axis]. (Now, what is a bit confusing is that you cannot do the same thing for "Entity Identifier" or "Date", but it seems to me that you should be able to do that, they are dimensions also.)
• Concept or [Line Items] jumping. Try jumping from the balance sheet to the detailed disclosures for "Inventory, Net" and "Property, Plant and Equipment, Net". Now, it is hard to tell this from the viewer but if you look closely you will notice that the inventory details are modeled as concepts and the property, plant and equipment details are modeled as [Member]s of an [Axis] or dimension. Both get you where you want to go, from the summary on the balance sheet to the details or from the details back to the balance sheet. But I am not sure that "concept jumping" is right really because the concept is really nothing more than a special type of [Axis] or dimension.
• [Member] jumping. OK, looking back at the first bullet point, what you are actually clicking on is the [Member] and not the [Axis]. Perhaps it is the values of the [Axis], which I am calling [Member]s, which is what enables the transition from summary to detail.
• [Table] or hypercube jumping. To round out this list, let be both point out that all the [Axis], [Member]s, [Line Items], are all tied together with either explicit [Table]s or implicit tables. So, you really don't even need a physical hypercube to "jump" from place to place in a report.

(NOTE: If you are confused by the terminology I am using, see the SEC XBRL Primer here on this blog post.)

Are you confused? Yeah, so am I.  But this is what I think I am seeing. What I call "hypercube jumping" appears to be simply leveraging the meta data relationships within an XBRL taxonomy and XBRL instance. The Firefox XBRL viewer appears to be hung up on the XBRL syntax.  It leverages explicit XBRL Dimensions information, leverages the implicit XBRL information such as entity identifier and period for rendering the business report, but it does not appear to be leveraging that "quasi" dimensional information (it is NOT XBRL Dimensions meta data but it is dimensional information).

Another thing which the Firefox viewer add on does not seem to be leveraging is the information models. If you notice how poorly a [Roll Forward] renders in the Firefox viewer add on, but then you go look at a [Roll Forward] rendered by the SEC Interactive Data viewer, you can try any [Roll Forward] such as the cash flow statement or the disclosure changes in warranty accrual in this SEC XBRL interactive data for Apple, the SEC Interactive Data viewer renders [Roll Forward]s quite nicely.

What I think I am seeing is "metadata leveraging". The Firefox viewer add on is leveraging meta data to jump from place to place in the report.  It is also using metadata to render the information and allow you to pivot the report on its [Axis] or dimensions. This is pretty slick! Don't get confused by the limitations of the Firefox XBRL viewer add on.

(This blog post is perhaps even more stream of consciousness than normal, sorry.  I am still trying to figure this out.)