Archive for the ‘XBRL Quality Assurance’ Category

Tagging Changes for Taxonomy Update

Friday, May 18th, 2018

Since the accounting landscape is constantly evolving, the FASB updates the US-GAAP taxonomy annually – adding concepts, removing others and sometimes restructuring existing sections.

Typically, RDG transitions to the latest taxonomy after the calendar year end filing period is complete and this year is no different.

From SEC.gov:

“The [SEC] strongly encourages companies to use the most recent version of taxonomy releases for their XBRL exhibits to take advantage of the most up-to-date tags related to new accounting standards and other improvements. The SEC suggests that filers consider transitioning to the 2018 taxonomies for the earliest reporting period that ends after March 12, 2018, but not for reporting periods that end before March 12, 2018.”

It is always our goal at RDG to create quality XBRL consistent with the most current structure of the taxonomy and latest industry standards. Because of this, tagging from one period to the next will not always be the same. If you would like one of our CPA, XBRL AICPA Certified team members to assist in a higher level review of your document please let us know.

For more information, please visit: Why did my XBRL tagging change from the last filing?

Please feel free to contact us if you have any questions or concerns.

What’s a Dimension?

Tuesday, February 27th, 2018

A dimension is a term used in XBRL very often, yet many struggle to understand what dimensions are in XBRL tagging. RDG is hoping to help clarify what exactly a dimension is. We will also have a follow-up post about proper use and placement of dimensions.

Dimensions are used in XBRL to add depth to particular numeric values that can’t be fully expressed using only the US-GAAP concept alone. Dimensional tagging is needed when facts need additional context applied beyond the concept and date.

Dimensions consist of two parts: “Axes” and “Members”. The Axis of the dimension acting as an umbrella for a category of items, and the Member describing the specific item.

For example, the Property, Plant, and Equipment table will have most of the line items tagged with the same US-GAAP concept, even when each line item clearly represents a different category of PP&E. So, to add the necessary depth and to distinguish each line item from the other line items, a dimension would be added.

In this case, the axis “Property, Plant and Equipment, Type [Axis]” would be added to each line item along with a “Member” such as “Land (Member) or Building (Member)”. Most of the time, the US-GAAP taxonomy’s structure will dictate how and when dimensions are used. The SEC has stated that it would prefer the pre-defined dimension schedules to be utilized when possible, but it does allow for the creation of unique dimensions if they are needed.

Another example of the use of dimensions is in The Statement of Changes in Equity. The Statement of Changes in Equity differs from the other main financial statements in that each line item is separated into constituent values that amount to the total in the final column. To differentiate the constituent values in each column, a dimension is applied to each of the facts in addition to the concepts and dates. This is done by adding an Axis and Member to the particular fact.

See example below:

Why did my XBRL tagging change from the last filing?

Tuesday, January 16th, 2018

One of the common questions we receive regarding XBRL tagging is, “Why did the tagging of the document change this period when compared to a previous filing?” This is a great question, with two short answers.

The first reason is that RDG Filings is consistently working to improve the quality of XBRL tagging on a quarterly basis to be consistent with the latest US-GAAP taxonomy and to remain in line with evolving industry standards.

The second is that the US-GAAP Financial Reporting Taxonomy is updated on an annual basis by FASB. This may or may not result in tagging changes in your document depending on which areas of the taxonomy are adjusted. These changes usually result in updates to best practices, style-guides , and Accounting Standards adjustments by FASB, AICPA and XBRL-US.

Typically, the taxonomy changes are released by FASB in the fourth quarter of the calendar year, but are not supported by the SEC’s EDGAR System until after the first calendar quarter of the next year, so most updates to tagging happen between the end of the first calendar quarter and the filing of any XBRL documents filed after that point.

Our role at RDG is to make sure all of our clients documents are in line with the most recent EDGAR and XBRL guidelines as well as best practices.  When tagging changes are necessary, we will point out what changes were made using our interactive ThunderDome XBRL Viewer.

We are proud of the fact that our XBRL data quality is at the top (99th percentile) of our industry quarter after quarter. There are only a few filing agents that can claim such consistency. The effort of improving XBRL data quality is why RDG Filings was one of the founding members of the XBRL.us Center for Data Quality and why quality and version control of your documents is our main objective.

XBRL FAQ: What is Bleed-Through?

Tuesday, May 3rd, 2016

Bleed-through is a common phenomenon on the SEC’s XBRL Viewer, as well as on RDG’s own Thunderdome® Viewer (which was designed to resemble the SEC’s Viewer, but with more information and features).  To explain it in a nutshell: Bleed-through is a natural result of how the SEC’s Viewer interprets XBRL code.  It is both normal and expected by the SEC.

Below is a common example of bleed-through.  The first table presented is directly from the company’s EDGAR document (it’s from a disclosure table in Note 1). The second is the same table, but how it is presented in the SEC’s XBRL Viewer.

Bleed Through Table 1

Bleed Through Table 2

 

The difference in the XBRL Viewer is the addition of the first line, “Net trade income (loss).”  Plainly those “Net trade income (loss)” numbers do not ‘belong’ in the Note 1 disclosure table.

So, why are they there?  Well, the short-answer is that due to the nature of XBRL and the function of the SEC’s XBRL Viewer, the numbers are “bleeding through” from the Operations Statement.  You can see that table from the EDGAR document here:

 

Bleed Through Table 3

 

The longer answer is that both the “Net trade income (loss)” line in the disclosures table in Note 1 and the “Net trade income (loss)” line in the Operations Statement are tagged with the same primary concept (us-gaap_NetIncomeLoss).  However, only the occurrence of that concept in the Note 1 table has had a dimension applied to it.

This bleed-through issue is not symptomatic of a problem with the tagging.  This document is tagged properly and it is entirely in line with the SEC XBRL requirements and FASB best practices.  The bleed-through is a direct result of the SEC’s XBRL Viewer, and to-date, the SEC has taken no steps to correct it.

Here’s what is happening on the SEC’s Viewer:  When the Viewer displays any fact that has been tagged with a dimension, the Viewer will also grab and display all other facts throughout the document that share the same tag but that do not include a dimension. In this case, the “Net trade income (loss)” line in the Operations Statement is tagged with the same primary concept as it is in the Note 1 disclosure table, but in the Note 1 table that concept is also dimensionalized.  As a result the SEC Viewer presents the “Net trade income (loss)” line from the Operations Statement in the Note 1 table.

This is classic bleed-through, and it has been causing headaches for people reviewing XBRL tagging since the inception of the mandate.

So, can it be fixed?  Firstly, it is important to understand that the SEC does not want filers adjusting their tagging simply to make the presentation in the XBRL Viewer look better. The reality of XBRL is that it is not intended for human consumption.  It is designed to make Financial Statements & Notes machine-readable.  When XBRL is tagged properly – each fact stands alone, free of the original document, getting context only from its own tag, date, and any dimensions.  From a “machine-readable” point of view, it does not matter where in the document the fact is located, so long as it is tagged correctly.  This is why the SEC did not build the Viewer to present the XBRL in an entirely human-readable format.  It is also why the SEC expects to see bleed-through, and does not consider it an issue.

The actual issue is when some filers attempt to “fix” bleed-through by adjusting the tagging with the presentation in mind.  We do not recommend these sorts of “presentation fixes” because they often contradict SEC guidelines and FASB best practice.  So in the case above – as with almost all bleed-through cases – we simply leave it be.  It is tagged properly, and it is machine-readable.  The SEC wants it tagged this way, and they expect the bleed-through that results.

XBRL Quality Assurance – A Potentially Too Honest Take

Tuesday, November 3rd, 2015

“XBRL is an unfunded mandate, and I don’t like paying for it in the first place.  Furthermore, nobody is even using this data, so why would I approve additional expense to have our XBRL reviewed by an independent and expert third party?”

While this is a direct quote from a CFO I spoke with recently, I thought it pretty well sums up the sentiment I hear from a lot of people I speak with about XBRL in general and about our Quality Assurance Services in particular.

I’m in sales, so of course when I get this type of objection, I look to re-direct the focus of the conversation and find a new way to present the value of the service I’m offering.  Often times, this kind of sales-spin is not too difficult because the facts of the case point to a clear conclusion, and it’s just a matter of illuminating the facts and presenting them in such a way as to make it easier for the prospective client to arrive at the same conclusion.

However, as is the case with the quote above, sometimes the “facts of the matter” are not inherently helpful to your case.  Sometimes, one or more of the facts actually align to make it more difficult for your prospective client to see the value.  In my years of selling, I’ve witnessed myriad sales people try to “dance” around undesirable facts.  The steps to this dance are graceless, and the music is discordant.

I refuse to do that dance, which brings me (at long last) to the point of this post:  The CFO quoted above is correct in some very important respects.  My job is not to avoid these ‘difficult facts,’ but rather to shine a light on them and make my case nonetheless.

My argument:

  • Hiring an independent, 3rd party to expertly review your XBRL is a sound investment.

The difficult facts that must be admitted:

  • Very few people outside of the SEC are currently looking at your XBRL files.
  • A review of the quality of your XBRL is, quite simply, not something you need to do at this point.

It is true that that outside of the SEC, very few people of immediate consequence to your company are looking at or utilizing XBRL data.  However, all the analysts I’ve spoken to or heard at conferences admit they would love to use this data, because XBRL would hugely improve and hasten their access to important information that drives investment decisions.  The only reason they don’t currently use it, they say, is because there is not enough data out there of reliable quality.  Much of the XBRL data being created by firms that outsource the work overseas—or that is created in-house by companies using some of the leading document control software—is not of consistent quality and does not provide a sufficiently accurate depiction of the filer’s financials to be trusted.

To this point, I say that there is both a present and future benefit to ensuring your XBRL is quality and useable for analysts.  Presently, the major analyst and investment houses are not currently using your XBRL code, but many people both in the investment community and the academic community are, and it is of significant importance that your XBRL present an accurate depiction of your financial disclosures.  And in the future, when the major analysts do start using this data (and they most certainly will), having a history of accurate and useable XBRL filings for them to call upon will put your company’s disclosures in a position of strength compared to the rest of the market.

Finally, it is also true that the SEC is not yet enforcing XBRL data quality to any significant degree, and there is scant motivation in terms of strict compliance.  However, the SEC has invested years of resources to the establishment of this new reporting requirement, and they will be increasing their enforcement of quality and expanding on steps they’ve already taken.  They already use XBRL as the main tool of their RoboCop fraud detection tool and to expand their enforcement reach.  The SEC has only increased its commitment to the XBRL reporting requirement, and they have also massively increased its use of the data.  So being out ahead of the SEC current requirements is valuable in its own right.

I liken a thorough review of your XBRL by 3rd party experts to buying auto insurance that also improves the performance of your car.  Ensuring your XBRL is of the highest quality will keep the SEC out of your hair now and in the future, and it will also make your data more available to and useable for analysts who will be using this data to drive important investment decisions.

Please feel free to contact me anytime.

Stewart Walker – SVP, Director of Sales

(415) 643-6017

An Interview with XBRL Experts — Why Outsourcing XBRL May Be a Safer Bet

Monday, August 24th, 2015

Recently I sat down with a couple of our resident XBRL Account Managers to see what their thoughts were on the clients’ knowledge of XBRL and whether going in-house would make sense.  Here’s what I found out:

Question: What would you say are the most challenging aspects of XBRL for clients to understand?

XBRL Account Manager: Bleed-through and negations would be top of the list.  Explaining the context of specific tagging can also be difficult.  Someone can look at the definition, and it could look appropriate on its face. However, the definition can sometimes be misleading, and you have to look at the structure of the taxonomy to see where the definition was pulled from to be certain it is appropriate.   It can also be hard to explain what actually happens within the code. For example, a client who transitions over to us from tagging on their own with a software will negate an item, but it will not reflect in the code. The presentation link base and the calculation link base will not match. It is difficult to explain why it’s not rendering in the code.

Question: Are you ever surprised by the coding errors that need to be corrected from previous vendors? What are some of the most common errors that you find yourself having to fix?

XBRL Account Managers: We are never surprised per se because, unfortunately, errors are frequent. That said the most common errors we find are inappropriate tagging. For instance, inconsistent parent and child relationships.

Question: How much time do you devote to keeping abreast all new SEC regulations?

XBRL Account Managers: Anytime there is a taxonomy update or new FASB guidance, we make sure we are familiar with it, and we spend quite a bit of time going through the guidance.  Additionally, we get updates from major accounting firms, AICPA, FASB, and XBRL-US about changes that are coming down the pipeline but that have not yet been adopted.  XBRL-US does not just update its members on new regulations, but also about any changes to their best practices.  We train our team at least once a week on various topics including accounting guidance and taxonomy updates.  And as founding members of the XBRL-US Center for Data Quality, we are deeply involved in the establishment of best practices as well.

Question: If you were the CFO of a public company, would you hire someone internally to take care of the creation of XBRL exhibits for you? Why or why not? No.

XBRL Account Managers: Absolutely not. That hired person is only going to have a fraction of the experience of a dedicated XBRL expert. You would be depending on someone who does four filings per year as opposed to an RDG manager for example that averages about 80 filings per year.  Now, to be honest, if I was a CFO of a large company with unlimited funds, and I wanted to hire someone internally who I could send to XBRL workshops and have them focus exclusively on XBRL — I would go that route.  But it sure seems inefficient to have a full time employee to do only four filings a year.  Unless they are exclusively committed to the company’s XBRL reporting, they simply won’t have time to keep abreast of all the guidance.  It just makes more sense to outsource.

Question: Why shouldn’t a company just outsource this process overseas?

XBRL Account Managers: Security first and foremost. This is time sensitive and pre-public information that we are dealing with, and sending it overseas prior to filing seems an unnecessary risk.   However, a lack of US GAAP knowledge would also be a significant concern. It is doubtful that any foreign 3rd party provider is going to be as familiar as necessary with the same accounting standards as your financial statements.

Question: What do you say to a company that says: “My financials don’t change much from quarter to quarter and I already have my XBRL files built, so why can’t I just carry this forward and tag future filings myself? Seems simple enough.”

XBRL Account Managers: If your financials are in one consistent form, it does make it a bit easier. However, while your financial statements may not change, accounting standards are always changing. The taxonomy is also constantly changing. If your tagging does not change to keep pace with changes to the accounting standards and taxonomy, you will be left behind. Even the FASB guidance changes every month and we are constantly adopting these changes.  If you have the same tagging for even a two year period– I guarantee that your tagging will be obsolete because everything around it has changed.

Question: Do you think that the SEC will ask for XBRL to be audited in the future?

XBRL Account Managers: Perhaps. However, before this happens, the SEC will have to push for increased consistency and quality on the XBRL reports, and they will have to increase their enforcement mechanisms to achieve this. The SEC is certainly going in that direction as they have already started to invest in-line XBRL, which would make auditing the XBRL more plausible.

So now the question goes to you- would you feel most comfortable hiring someone internally or outsourcing?

 

Written by : Divya Patel- VP Business Development

If you have any questions or would like any further detail, please feel free to contact Stewart Walker – SVP, Director of Sales

(415) 643-6017

RDG Filings is Honored to be a Founding Member of the XBRL US Center for Data Quality

Friday, June 26th, 2015

Since the inception of the XBRL mandate, RDG has strived to set the standard for XBRL data quality, and we are proud to be among the leaders in the XBRL community.  That is why—along with Merrill, RR Donnelley, Vintage-a division of PR Newswire, and Workiva—RDG Filings is delighted to be a Founding Member of the XBRL US Center for Data Quality.

The formation of the Center for Data Quality—announced yesterday—is the culmination of months of work by the XBRL US, the Founding Members, and many more people to whom we are grateful.

The Founding Members provide XBRL tagging services and software to a majority of public companies, and they have come together in shared commitment to the importance of improving the quality of the XBRL data that is filed with the SEC.

The advent of the XBRL mandate has been a tremendous improvement to the existing HTML/EDGAR format, and XBRL has become the worldwide standard for the reporting and analysis of financial information.  However, the full benefits and potential of XBRL have not yet been realized because much of the XBRL currently filed with the SEC contains errors and inconsistencies.  As a direct result of valid concerns about its accuracy and reliability, investors and analysts have been reluctant to utilize the available XBRL data.

The XBRL US Center for Data Quality believes that the errors and inconsistencies currently restraining XBRL’s true potential are primarily the result of:

  • Absence of unambiguous guidance for using the US GAAP taxonomy
  • Lack of corporate awareness of errors in their filings

Investors, analysts, the SEC, and the market in general will benefit greatly from the utilization of XBRL data, and RDG Filings is happy to join forces with other leaders in the XBRL community to ensure that the quality and utility of the data improves dramatically.  The Data Quality Committee will develop:

  • Guidance to provide for uniform, consistent tagging of financial data and to clarify those specific circumstances where custom tags are appropriate
  • Automated validation rules to detect input errors and verify compliance with the Committee’s guidance

RDG Filings agrees with Barry Melancon, CEO of the American Institute of CPAs, and Chair of the XBRL US Board of Directors, when he says that in order to “realize the full economic benefit of XBRL, investors and other consumers must have access to accurate and reliable XBRL data.”  Melancon applauded the formation of the Center for Data Quality as an “industry-funded initiative” that will “make it substantially easier for companies to create consistent, good quality financial statements in XBRL format.”

RDG Filings—along with the other Founding Members of the XBRL US Center for Data Quality—has always made a commitment to creating quality code that is of the greatest value and utility for analysts and investors.  There is a “clear demand for timely, structured, machine-readable data,” and we are excited about the work the Center will do to fulfill the potential that XBRL holds for public companies and the investment community.

Feel free to contact me any time.

Stewart Walker – SVP, Director of Sales

(415) 643-6017

Once Again, The SEC Bolsters XBRL

Monday, February 23rd, 2015

Even as the misguided efforts to minimize the reach of XBRL reporting continue in Congress, the SEC has increasingly endorsed and strengthened its commitment to this important advancement in financial disclosure and data availability.  Recently, the SEC has taken aggressive steps to promote and protect XBRL data.

On February 19th, 2015, SEC Commissioner Luis Aguilar endorsed the Investor Advisory Committee’s (IAC) 2013 recommendation to have issuers provide information in an interactive data format.  Speaking at the SEC Speaks conference, Commissioner Aguilar promoted the SEC’s adoption of machine-readable XBRL format and promoted the notion that it would be a great benefit to investors Proxy information were also presented in XBRL.  Commissioner Aguilar said: “For instance, it has been suggested that the better use of 21st century technology in the proxy process may facilitate how shareholders can more effectively receive and understand how their companies are performing, and to better put that performance into perspective.  Indeed, it’s only logical to expect that better informed investors would likely participate in greater numbers.”

Aguilar went on to endorse the IAC’s recommendation that the SEC “immediately prioritize tagging important information with respect to various corporate governance issues, including portions of the proxy statement that relate to executive compensation and matters voted upon by shareholders.”  His support is supported by the fact that “tagging the voting data and results contained in certain forms could result in more informed voting and investment decisions, and would facilitate comparisons among public companies.”

At the same SEC Speaks conference, the SEC’s Investor Advocate, Rick Fleming, criticized the regressive XBRL proposal put forward by Representative Robert Hurt.

Representative Hurt’s proposal would create an exemption from the XBRL filing requirements for certain small companies, which would exclude more than 60 percent of all public companies.  Mr. Fleming said that if this were signed into law, it “would seriously impede the ability of the SEC to bring disclosure into the 21st Century.”  He continued, “If Congressional action is needed, it should be used to press the SEC to move forward in its efforts to make disclosure more accessible and useful for investors.”

The SEC has only increased its commitment to the XBRL reporting requirement, and they have also massively increased its use of the data.  Investment decisions by analysts and enforcement decisions by the SEC will increasingly be driven by the information provided in the XBRL data, and for that reason RDG has, since its very inception, been committed to having the best people creating the highest quality code.

XBRL is the future of financial disclosure, and RDG can help public companies create excellent and usable data.  Please contact us to learn more about our Full Service Tagging Services and our XBRL Quality Assurance Services.

Feel free to contact me any time.

Stewart Walker – SVP, Director of Sales

415.643.6017

The SEC Expands Use of XBRL and Validates RDG’s Commitment to Excellence

Wednesday, January 21st, 2015

On December 30th, the SEC significantly expanded its use of the XBRL data provided by public companies with their 10-Q and 10-K filings.  It launched a new program that is designed to “facilitate investor analysis and comparisons of public company financial statement data” by consolidating the “data that companies provide in structured formats” into data sets that will be “posted for bulk downloads on the SEC’s website.”  The program will begin using only the information provided in the base financials, but it will soon include data from the footnotes as well.  The purpose of this program is to promote and expedite the use of XBRL data by investors and academics.

We are very happy that the SEC has begun using XBRL in this way.  This step begins to validate the commitment we have long made to creating top-quality code that exceeds the standard of SEC compliance and is entirely useable for analysts and investors.

We are gratified the SEC has taken these steps, because the XBRL code we submit on behalf of our clients is excellent, compliant, and useable.

In the data sets the SEC has released, there will be a lot of code that was built by providers who outsource the XBRL overseas, or who have otherwise made a lesser commitment to quality XBRL data.  Additionally, there will be a fair amount of code built by the reporting teams at individual companies who have taken the responsibility of properly structuring XBRL in-house.  When the XBRL is poorly built, or created by people who are not CPAs and experts, there is a risk that the information made available by the SEC in these data sets will be an inaccurate reflection of the companies’ financial information.

Investment decisions by analysts and enforcement decisions by the SEC will be driven by the code in the XBRL data, and for that reason RDG has–since its very inception–been committed to having the best people creating the highest quality code.

XBRL is the future of financial disclosure, and RDG can help public companies create excellent and usable data.  Please contact us to learn more about our Full Service Tagging Services and our XBRL Quality Assurance Services.

Feel free to contact me any time.

Stewart Walker – SVP, Director of Sales

415.643.6017

The SEC Massively Expands Its Use Of XBRL Data

Friday, January 9th, 2015

On December 30th, the SEC massively expanded its use of the XBRL data provided by public companies with their 10-Q and 10-K filings.  The SEC announced and launched a pilot program designed to “facilitate investor analysis and comparisons of public company financial statement data” by consolidating the “data that companies provide in structured formats” into data sets that will be “posted for bulk downloads on the SEC’s website.”  The program will begin using only the information provided in the base financials, but it will soon include data from the footnotes as well.  The purpose of this program is to promote and expedite the use of XBRL data by investors and academics.

This program is the most significant expansion of the availability public companies’ financial disclosures since the advent of the EDGAR system in the 1990’s.  For the first time, every public company’s base financials will be available in one data set, which means that investors and academics will no longer have to manually cobble together usable data from the information available in the archaic and individual EDGAR filings.

This announcement made on the penultimate day of 2014 capped off what was a big year for XBRL.  This announcement put an exclamation point on a year in which the SEC dramatically increased both its use of XBRL and the attention it pays to structured data.  Earlier in the year, the SEC conducted a staff assessment of the use of custom tags.  In 2014, the SEC also began sending ‘Dear CFO’ letters to companies regarding required calculations in their XBRL exhibits.

With this move, the SEC has positively affirmed that XBRL is the present and the future of financial reporting.  They have also sent an unmistakable message that public companies should take the necessary steps to ensure their XBRL data is well structured and properly usable.  These public data sets are based on the XBRL only and are not verified against the content of the EDGAR document, so poorly constructed XBRL data will not provide an accurate depiction of a company’s financial disclosures.  It takes an expert to create quality, compliant, and truly usable XBRL data.

XBRL is the future of financial disclosure, and RDG can help public companies create excellent and usable data.  Please contact us to learn more about our Full Service Tagging Services and our XBRL Quality Assurance Services.

Feel free to contact me any time.

Stewart Walker – SVP, Director of Sales

415.643.6017