Part of my role at Rivet Software is to evaluate other products. My focus is typically on compliance with SEC rules and other industry guidance. One of the most powerful tools to aid filers in their compliance is validation. In the following blog I will reflect on some different ways to validate and provide context around the meaning of various validation messages.

The new version of the XBRL Cloud EDGAR Dashboard is gorgeous, if you are reading this blog and you have not seen it yet, be sure to check it out. The dashboard consumes XBRL files and displays them in a stylistic and functional way. When a filing is posted on the SEC website, XBRL Cloud takes the information and adds a new line to the Dashboard that indicates the name of the filing company, the form type filed, the percent of extended elements,  the creation software that was used to prepare the filing, and free validation checking for the EDGAR Filer Manual and US GAAP Architecture, In short, it is fantastic, it is a great rendering engine that reinforces the point that XBRL is about more than rendering in any specific rendering engine. XBRL cloud allows users to render the data in numerous layouts. A breakdown of some of its features can be found at xbrl.squarespace.com.

XBRL Cloud has rightfully generated quite a bit of attention resulting in me being questioned by filers about the XBRL Cloud Validation on the Dashboard, and being asked what it all means. The XBRL Cloud reports on “Errors”, “Warnings”, “Inconsistencies”, “Best Practices”, and “Information issues” as a number. For example RR Donnelley & Sons Co’s most recent 10-K filing has 26 “Inconsistencies”, but what exactly does that mean? Without digging into the details, it means that the filing is likely EFM 6.15.2 compliant. Because I know about the complexities of showing the required calculation relationships defined in EFM 6.15.2 and I know how this is especially complicated for detail foot note disclosures, I am not surprised that there are 26 inconsistencies. The point is that XBRL Cloud runs its own validation, but does not currently provide the context of the errors, or at least not for free.

Solutions like Crossfire and Magnify use validation methods similar to the XBRL Cloud by reporting errors and warnings in various categories.  But both go a step further than the XBRL Cloud. Magnify shows the context of any given error tied to a fact in the rendering engine while Crossfire shows the context of the tagged number (fact) in the source document. But why is this a value add?

When there is a large source generating fact errors that appear throughout the document, it is much more efficient to simply double-click the Crossfire validation and see where the errors are originating in the source document and what tags are applied to those numbers. In Crossfire, the source document is the source of the XBRL and the HTML files. If a validation error is received that something does not foot, the number can be changed or the XBRL can be easily reviewed to see if it needs to be changed.  Crossfire’s validation is performed before the final XBRL files are created, making validation a Crossfire feature available to self-filers.  While self-filers using Crossfire tend to not get into the weeds regarding the technical nature of the validation messages, they are nevertheless able to easily fix potential errors since the validation links directly to the tags in the source. I personally like the multi-user commenting features so I can explain to my team why I changed a tag in the source and why, linking my comments to the numbers (facts) that triggered the validation.

My current position is Compliance Manager (aka technical expert) but today it sounds like I am on the sales team. For more information on getting the whole validation picture, contact the experts at solutions@rivetsoftware.com.

- Jordan

Looking at amended filings (specifically form type 10-Q/A, 10K/A, and 20-F/A) I observed that the number of amendments have gone up since the pre-XBRL days, but why?

Using Really Simple Syndication (RSS), Rivet brings in real-time XBRL data from the SEC’s website to perform limitless analysis of financial data formatted in XBRL using our own Crossfire Reporting Platform. Today I was interested in examining amended filings.

The simple way to do this would be to search for XBRL facts with the element “dei_DocumentType” with a fact value of 10-K/A, 10-Q/A, or 20-F/A (you could look at any of the “/A” form types). That would be too easy, because of the SEC rules, and Question 105.08 of the Division of CorpFins’s Compliance and Disclosure Interpretations (C&Dis) there are often amended filings that do not indicate the files are amended for XBRL. The Primary reason for this is because filers are using their 30 Day Grace Period defined in Rule 405(a)(2) of Regulation S-T where the form type filed with the SEC could be “10Q/A”, and the fact filed for XBRL is “10/Q”. That is, I could query in XBRL for 10/Q and return result for companies that files with the sec form type “10Q/A”.

Rivet being the software company that we are, we found a way to use the RSS feed to extrapolate the form type filed with the SEC, so I can determine how many Grace Filers are out there. I can also get results for companies filing amended for some legitimate reasons; however my suspicion is that most are filing with their grace.

The chart below is indicating the number of filers filing XBRL and form type 10Q/A, 10K/A, or 20F/A based on fiscal quarter.

We expect to see more amended filings for companies filing with XBRL because the wave nature of the mandate. I am curious to know how many more filers are filing amended with their grace due to detailed tagging. In order to do this I had to actually read their amended description.

I took 50 of the most recently amended 10Q/A, 10K/A, and 20F/A filings for companies that are filing their detailed disclosures and 50 of the most recently amended 10Q/A, 10K/A, and 20F/A filings for companies not filing detailed disclosures. I read each amended description to understand if the filer was filing amended to include their XBRL or for some other legitimate reason. Here are my results:

Observations:

1. Detail footnote filers filed amended to include XBRL 36% percent more than the non-detail tagging filers.
2. Filers filed amended form types 2X more to include XBRL from 36% to 64%, the 36% representing non-XBRL related amendments.

Filing in detail is obviously more complex, I encourage all filers to make sure they are using solutions that are proven to support DFN filings.

To learn more about DFN filings, join me for a fun, interactive webcast session and learn how to avoid detail footnote tagging’s common pitfalls and get up-to-date with the latest best practices to ensure your team makes a smooth transition.

Mastering Detail Footnote Tagging
Thursday, May 17, 3:00pm-3:45pm ET - Register for webinar »

Feel free to contact me for my research results.

- Jordan

In Economics 101 we learned about Adam Smith’s concept of the invisible hand.  If you remember back to your classroom days, the concept has to do with an individual’s self-interest in maximizing their own gain.  This self-interest actually promotes efficient markets and benefits society without the individual having any benevolent intentions, thus being lifted by an invisible hand.  I believe we are witnessing the invisible hand of XBRL right before our eyes.  Allow me to explain.  I recently sat on a panel during the Suffolk University sponsored conference Structured Financial Data in an Age of Complexity:  Exploring XBRL Use and Application Today and Into the Future.  In our panel, we discussed actual examples of individuals using XBRL today.  I was there to represent the perspective of our 1,500 customers.  The outcome was my realization that there are actually two invisible hands promoting the usage of XBRL for our clients.

It started with our clients using peer XBRL information for tag comparison.  Initially, there was uncertainty as to what tag to use or how to structure a complex footnote for detail tagging; and looking at peers’ tags provided guidance.  This is not a new concept; every accountant in the financial reporting space knows about Trends and Techniques from the AICPA.  It is used as a reference when writing and/or structuring a new footnote disclosure.  As clients use their competitors’ XBRL tags as a reference for tag selection, they quickly see how easy it is to use XBRL.  Once they see how easy it is to use XBRL, they begin to use their competitors’ actual XBRL data to enhance their current benchmarking process including KPI’s and other attributes.  It is their self-interest for easier competitive comparisons that are promoting (via the invisible hand) the usage of XBRL data reported to the SEC.

The second component has to do with the entire close process.  Many of our clients came to us with a close process that was very manual, time-consuming, stressful, and had not changed for years.  The SEC’s XBRL mandate was viewed as just another disclosure they had to complete within an already strained process and timeline.  Software can now utilize XBRL to go much deeper into the systems and processes of the close and thus provide less manual work, streamlining the process.  As our clients see the capability of linking their actual disclosures to their source financial data and begin to see days shaved off of their quarterly close cycle; they are hooked.  It’s in the Director of Financial Reporting’s self-interest to save days every quarter, not to mention to get rid of the additional stress brought on by the XBRL mandate.  It’s the invisible hand at work.

In my last blog I wrote about XBRL being here to stay.  XBRL is not only here to stay but it’s going to touch more and more financial data systems and processes.  The invisible hand of XBRL benefits everyone and will continue to lift the consumption of standardized data now and into the future.  Don’t let the invisible hand of XBRL pass you by.

- Raul

This past weekend I prepared my house for the seller’s paradise that is Denver’s current housing market. Fortunately for me, my house was built well and is in great condition.

I did have to make some minor upgrades to ensure my house delivered maximum appeal. I did some painting, yard work, caulking, and staging of furniture – the more mundane tasks that I could take care of without paying an arm and a leg. I also had some cracks in the masonry of my brick. When I discussed fixing the cracks with my wife she gave me “the look”. “The look” is a super power that can will a man to pick up the phone and shell out some dollars to hire a professional without uttering a single word, a Jedi mind trick of sorts.

Why was my wife’s look so effective? During the previous fall, I decided to do some masonry work of my own. I was filling cracks in the garage floor with self-leveling mortar, which went well – until I had the bright idea to fill in a crack on the wall. My work looked good until about two hours later as the self-leveling mortar seeped down the wall turning in to a small puddle on the floor.

There are plenty of parities I could make about the XBRL mandate and my weekend experience but here is the short of it.

1. Go with a provider that has experience specifically with detail footnote disclosures.
2. Save money by using a system that lets you do some of the leg work. You should be able to make changes to your source with the XBRL hidden underneath so there is no need to deliver a source document or have a “pencils down”.
3. Consult with the experts; use technology to create efficiencies in your close process; preparation, validation, documentation, automation, controls, data filters, multi user, peer analysis, and more.
4. Pay experts to build your XBRL “home”. Have an experienced service provider build your XBRL foundation and maintenance will be cheaper and easier.
5. Be careful taking shortcuts, nothing replaces expertise.

The word “conversion” can apply to many things in many ways: currency exchange rates, a switch in product preference, the adoption of a new religion, energy equivalency of mass, going for two instead of kicking an extra point, lemons turning to lemonade, units of measurement (1 Inch ≡ 1/36 yd ≡ 1/12 ft ≡ 0.0254 m.), or my personal favorite, the conversion (reaction) of chemical compounds in chemistry. 

Wikipedia defines this particular type of conversion as:  Specifically the property ‘X’ related to the yield ‘Y’ by multiplication with the selectivity ‘S’, i.e. the mathematical definition X(conversion) * S(selectivity) = Y(yield), all calculated on a molar basis; e.g. in a certain reaction, 90% of substance A is converted (consumed), but only 80% of it is converted to the desired substance B and 20% to undesired by-products, so conversion of A is 0%, selectivity for B 80% and yield of substance B 72% (= 90% * 80%) 

The simplest term for this is a chemical reaction.  Finding an example that is easy to understand has turned out to be something of a challenge. This is probably because this is a science; if you want to learn more about it, I would read a book on creating rocket fuel.

The relevant question for us though, is how does this relate to converting to the 2012 US GAAP Taxonomy?  

Conversion: 

• 90% of the elements are converted and 10% of the elements are no longer used because they are deprecated. 

Selectivity: 

• 80% of your elements are 100% Valid, but some extended elements will be replaced (back filled) by new 2012 taxonomy.
• 72% (90% x 80%) are completely valid.
• 2% of the extended elements should be replaced by new 2012 elements 

Yield: 

• 72% of the element are the same as 2011 and need little to no review
• 18% (20% x 90%) Are still extended.
• 10% of the elements will be new to your taxonomy 

This does not have to be rocket science! 

Rivet’s Crossfire platform for full service and self-service makes conversion simple. The utility leveraged is called the conversion dialog. The conversion dialog shows you the elements that are changed in conversion; it also surfaces deprecated elements and recommends replacements according to FASB recommendations. When you complete the conversion dialog Crossfire makes a conversion comment to maintain an audit trail of the change in your folio that result from the conversion. This can easily be exported, creating a single report stating only the things that changed as a result of the conversion relevant to your XBRL documents. 

For especially complicated changes in modeling, such as the modeling of a specific element into a generic element and a specific member, Crossfire has user commenting that allows the user to document complicated changes (that is what we do for full service clients). 

I am not a sales guy. I am the guy that understands those complicated changes and can tell you what exactly changed and why as a result of the conversion. 

Supporting Documentation: 

If you are a Rivet customer we will provide you with a 2012 taxonomy conversion toolkit that includes an Excel document that breaks down the entire 2011 and 2012 taxonomy changes. If you are interested in reviewing extended elements, check out the “New Elements by Report” tab which will surface new elements by their presentation group in the US GAAP Taxonomy. This will help you find the elements that correspond to a specific note or disclosure much quicker. 

In the example below you can see that the elements are separated into statement top level groups.  By expanding the top level group for “Statement of Financial Position, Classified”, you will see only the new elements that pertain to that section of the taxonomy.  This will be a beneficial tool while reviewing your extended elements. 

For those of you who, like me, take pride in understanding every change in the US GAAP Taxonomy, we have also included tabs for changed elements (“full analysis” tab) and deprecated elements (“deprecated” tab).  It is a schedule that you can use to filter changes by Balance Type, Definition, Data Type, Standard Label, Period Type, and Deprecated element changes.  In the example below we filtered for Period Type Changes.  An “X” will indicate what changes have occurred to an element from the 2011 to 2012 taxonomy. 

This is the way I like to see my data; RAW and linked! 

For those of you who like to go straight to the source, the FASB manages the US GAAP taxonomy and they do an incredible job of documenting the many changes they have made. The site includes a high level review of the 2012 taxonomy in their Release Notes, and a more comprehensive list of the changes in their 2012 US GAAP Financial Reporting Taxonomy – Guidance and Supporting Materials.  Similar to the 2011 to 2012 Changes Excel document we host on our website, the FASB has an Excel version of modifications to the 2012 taxonomy called Modifications to the 2012 Taxonomy. 

So, if after reading this you’ve realized that you’re anything like me, (and I’m truly sorry if you are), then you would rather have all the details on a single spreadsheet. With just the data in front of you, you can create the pivot table, do the conversion lookup, and slice and dice the data your own way. If you’re not like me, just ask Rivet for a conversion report with the summary. 

The 2012 Taxonomy hit today on the SEC’s website, so get your conversion on and blast off!

- Jordan

Links:
Rivet Software – 2012 Taxonomy Conversion Toolkit »
FASB – 2012 US GAAP Financial Reporting Taxonomy »
SEC – Standard XBRL Taxonomies »

High above the surface of the ever-changing world of XBRL, I had a lot of time to think about the past week’s events at the 24th XBRL International conference. My flight home from Abu Dhabi was close to 15 hours so my mind had the time to wander between the detailed taxonomy discussions, to countries gaining insight on how to best implement XBRL. Of all the sessions I participated in, my mind continually came back to a photograph Mike Willis shared in one of the sessions. It was an image circa 2000 taken at a meeting at Morgan Stanley, a meeting that many point to as a key milestone in the launching of XBRL globally. It’s amazing to think how far XBRL has come and that its conferences now have representatives participating from around the world. Additionally, many people in that photo continue to evangelize the benefits of XBRL today. In fact, a number of them happened to be present in Abu Dhabi for the conference.

view larger photo

The amount of knowledge created and consumed by the XBRL community since 2000 is remarkable. With numerous international mandates in progress having been shared at the conference, I got to experience some of what the future holds for XBRL. It is as bright as it is inspiring. The UAE (United Arab Emirates) for example, which hosted the conference, celebrated the success of their XBRL initiative launch. Numerous securities representatives, companies, and service providers from the UAE were invigorated by the excitement of the conference, as were others from around the world. It was truly an international conference–you name the region and someone from a related regulator’s office was in attendance. The SEC’s key role in the growth of XBRL was highlighted, as the US is still the financial and technological leader of the world. The SEC’s successful implementation of XBRL and the international financial community’s desire for more financial accountability are providing confidence to other regulators as they continue to push forward with XBRL mandates of their own.

As the pilot tells us to prepare for our landing, I not only think of my last 15 hour voyage but of XBRL’s decade plus journey across the globe. My thoughts then return to the undeniable notion that XBRL and financial transparency are benefits to everyone and are definitely here to stay.

- Raul

 

Name: Avoiding Common Errors in XBRL with Special Guest Mike Willis, PwC Date: October 6, 2011 1:00 PM ET Additional Info: Panelists – Raul Varela, CFA (Rivet Software); Mike Willis, CPA (PwC); Phil Mennona, CPA (Rivet Software) View webinar transcript »