A comprehensive analysis of 7,160 SEC XBRL financial filings has resulted in a set of common sense insights, or Digital Financial Reporting Principles, which are helpful to creators and consumers of such digital financial reports.
Looking at details across the 7,160 public company 10-K filings helps one see and understand the combined digital financial reporting "forest" which is comprised of individual digital financial report "trees". This perspective helps one understand the utility of something like the Financial Report Semantics and Dynamics Theory for relating to digital financial reports.
Although still a work in progress, this draft helps both accountants and software companies who build software for accountants get their heads around digital financial reporting, including SEC XBRL financial filings.
Here is a summary of the common sense principles:
- Recognize that the goal is the meaningful exchange of information.
- Meaningful exchange requires prior existence of agreed upon syntax, semantics, and workflow/process rules.
- Recognize that even if SEC filing rules and the US GAAP XBRL Taxonomy may allow for ambiguity; approaches do exist where SEC filings rules can be followed and information is unambiguous.
- Recognize that being explicit contributes to the unambiguous interpretation of reported information.
- Recognize the difference between presentation and representation.
- Recognize that a financial report should be a true and fair representation.
- Recognize that financial reports contain a discrete set of report elements which have specific properties and relations.
- Recognize that report elements can be categorized into common groups which have common relevant properties.
- Recognize that financial reports contain a discrete set of financial report component which can be categorized.
- Recognize the existence of and properly represent intersections between report components.
- Always strive for consistency
- Recognize and respect fundamental accounting concepts and unchangeable relations between those accounting concepts
- Recognize and respect common report component arrangement patterns.
- Recognize and respect common concept (or [Line Items]) arrangement patterns.
- Recognize and respect common member arrangement patterns.
- Avoid mixing or run-together concept arrangement patterns.
- Avoid mixing distinct characteristics and concepts.
- Recognize need for both automated and manual verification processes.
- Recognize that concepts cannot be moved between fundamental accounting concept categories.
- Avoid unknowingly changing information representation approach midstream.
- Avoid inconsistencies in network identification.
- Recognize that characteristics apply to all reported facts within a report component.
- Recognize that rendering engines render presentation differently but the meaning is the same across all rendering engines.
- Number of members reported does not change the characteristics of a reported fact.
- Label networks with meaningful information.
Article originally appeared on XBRL-based structured digital financial reporting (http://xbrl.squarespace.com/).
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