Digital Financial Reporting

So I am digging into income from continuing operations before income taxes and I am uncovering some additional interesting stuff. I decided to look at all the filings for one SIC code and picked this one 7011 Hotels and Motels to take a look at.  Here is a list of what I found. The two interesting columns are the label used by the filer and the concept used to report that line item.  Of 29 filers looked at, 12 created extension concepts and 17 used a US GAAP Taxonomy concept for what seems to be exactly the same thing. Here are the labels and extension concepts for the 12 which created extension concepts for this line item:

• Loss before income tax (benefit) provision | asca:IncomeLossFromContinuingOperationsBeforeIncomeTaxes
• Income (loss) from continuing operations | hot:IncomeFromContinuingOperationsBeforeTaxes
• Income before income taxes  | wynn:IncomeLossFromContinuingOperationsBeforeIncomeTaxesAndNoncontrollingInterest
• Income before income taxes  | chh:IncomeLossFromContinuingOperationsBeforeIncomeTaxes
• Income from operations before income taxes  | penn:IncomeLossFromContinuingOperationsBeforeIncomeTaxes
• Income before income taxes | rlh:IncomeLossBeforeTaxes
• Income before income taxes  |mar:IncomeLossFromContinuingOperationsBeforeIncomeTaxes
• Loss before income taxes  | mgm:IncomeLossFromContinuingOperationsAll
• Income before income taxes | h:IncomeLossBeforeIncomeTaxes
• Loss before income tax expense | mhgc:IncomeLossBeforeIncomeTaxes
• Income (loss) before income taxes and discontinued operations  | get:IncomelossBeforeIncomeTaxesAndDiscontinuedOperations
• Income before income taxes | lvs:IncomeLossFromContinuingOperationsBeforeIncomeTaxesAndMinorityInterest

Now here are the labels for SEC filers who did NOT create an extension concept, rather they use one of four US GAAP Taxonomy concepts:

• Income (loss) from continuing operations (HAS NO TAXES)
• Net earnings from continuing operations
• Net loss from continuing operations
• Income (loss) before income tax provision (benefit)
• Income (loss) before income taxes
• Income (loss) from continuing operations before income taxes
• Income (loss) from continuing operations before income taxes
• Income (loss) from continuing operations before income taxes
• Income before income taxes
• Income before income taxes
• Loss (income) before income taxes
• Loss before income taxes
• Loss before income taxes and discontinued operations
• Net income before taxes
• Earnings (loss) before income taxes
• Income (loss) before income taxes
• Loss before taxes

Not a lot of difference between the line items really. 

Some say "earnings" some "Net income" some "Loss" some "Net earnings" some "Income (Loss)" some "Net loss".  But, all those terms refer to the same thing in essence: Income (Loss). 

Some refer to continuing operations specifically, others say "before discontinued operations", others do not use the term continuing operations, but they all actually refer to: continuing operations.

Some say "taxes" some say "income taxes" some say "tax provision (benefit)".  Again, they mean: income tax (benefit).

Further, here is a link to the SEC Division of Corporate Finance, Financial Reporting Manual. I did a quick search on "income from continuing operations" and came up with 22 hits.  This is a screen shot of one:

I would also point out that the terms "revenues", "gross profit" and "net income" are referred to also. Core financial reporting semantics.

So what is the point? It seems to me that the 12 filers on this list would be hard pressed to justify creating an extension concept for what amounts to "income from continuing operations before taxes", a term which 17 others here did us, and over 70% of all filers report.  Further, because of the high percentage of inappropriate extension concepts I am finding, that percentage of 72% will likely get higher if those extenision concepts are replaced with the proper concepts.  Plus, the fact that the SEC seems to require this concept to be reporting is pointing to this concept being part of the core financial reporting semantics.

Initially I said that 5151 SEC XBRL financial filings had a "5 Star" rating. It was pointed out to me that I had changed the evaluation criteria, dropping XBRL Cloud's EFM validation as a constraint and thus minimizing EFM validation. This was not my intent.

My intent was to focus on the core financial semantics of the filings.

However, I do accept this criticism and have provided a revised set of filings which both support the core financial semantics which I am trying to point out, but also have no XBRL Cloud EFM validation errors reported.  This revised list can be found here. With this adjustment, the SEC XBRL financial filings which pass both criteria drops to 4875 filings which is 88% of all the filings analyzed.

This is still a good increase.

This list of 5151 SEC XBRL financial filings, 93% of the 5525 filings I analyzed, get 5 stars for meeting the core financial semantics constraints.

Granted, it is a small set of constraints, 9 in total, but it is a start.  The interesting thing to me is that I could do this at all.  The information on that rather large HTML page is extracted from SEC XBRL filings without even using an XBRL processor.

So, a beach head has been established. It seems to me that XBRL can in fact work to deliver on the promises made by its advocates (of which I am a member).  I propose that these 5151 filings and the 9 constraints offer clues as to how to get the complete information set for all filers working like a Swiss watch.

The list of 5 star filings has grown from one, to 24, to 92, to 5151. Granted, not a certifiable scientific analysis but positive signs none-the-less.

The document Core Financial Reporting Semantics points out the key financial reporting semantics which I see in a balance sheet, income statement, cash flow statement, and overview of information about how a company reports its financial information.

All of these core financial reporting semantics are supported, and in fact determined by, a set of 5525 SEC XBRL financial filings which I examined.  You can find the complete data set here.

Jean Louis Rodolpe Agassiz is attributed with the following quote:

The facts will eventually test all our theories, and they form, after all, the only impartial jury to which we can appeal.

The following is a summary of the core semantics which SEC XBRL filings show. SEC XBRL financial filings would find it hard to justify not following these core financial reporting semantics in my view:

• Balance sheets report assets.
• Balance sheets report liabilities and equity.
• Balance sheets report equity.
• Balance sheets balance.
• Cash flow statements report net cash flow.
• Net cash flow foots (perhaps in two ways, perhaps only in one).
• Income statements report net income (loss).
• OPTIONAL, certainly a best practice: Income statements report income (loss) from continuing operations before taxes.
• OPTIONAL, certain industries do not apply: Balance sheets report current assets and current liabilities.

Are their other rules? Likely.  Those 9 rules would be very, very hard to dispute.

While the US GAAP Taxonomy can be ambiguous about how this information is reported, it is the case, as proven by SEC XBRL financial filings themselves, that this information must be reported it seems to me.  The US GAAP taxonomy does have concepts for every one of these 9 rules.  As such, an SEC filer would be hard pressed to justify creating an extension concept for any of these items, it seems to me. 

I unofficially declare that using the information from the income statement of SEC XBRL financial filings maddening.

While it is true that I am not a professional programmer, in fact I am not very good and have been referred to as a "dinker"; I do understand some of the things which are helpful in using information and things which get in the way of using information.

Now, the balance sheet and cash flow statement are a cake walk. The reason is that there are totals and subtotals which you can use to check to be sure you are grabbing the right information on both the balance sheet and cash flow statement. The structure of balance sheets and cash flow statements between filings is very consistent. You can calculate or impute information and there is generally something to check what you impute against to be sure you are getting things right.

There is little of these types of things when it comes to the income statement.  What is more there are other things which just get in the way.  For example, I thought I was getting Net Income (Loss) correct because I was at least finding the numbers in the filing.  But what I realized is that there is duplication of concepts in the SEC XBRL financial filings.  Duplicate values for Net Income (Loss) exist if the filer has a noncontorlling interest. Seeing as 21% of all filers have a noncontrolling interest, I cannot be sure I am grabbing the correct Net Income (Loss) concept.  There is a big difference between getting some number and getting the right number.

It seems as though the details are there.  If the roll up of the income statement is correct and if the detail is there (it matches the HTML so it likely is), then you can get to the pieces you want.  But as far as I can see, this could be a task which needs to be done for each and every SEC filing to make comparisons work well and to be able to provide, say, an aggregate value for revenues, net income (loss) or other such reported facts across all SEC XBRL financial filings or some subset of filings.

The good news is that it does look like it is quite possible to use this information.