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XBRL Errors: How Can I Minimize Them?

  • 12 Aug 2014
  • Neal Hannon
  • Edgar SEC

First, a little background.  Not every XBRL filing contains errors but many do. Here is a recent chart summarizing over 10,000 submissions to the SEC since the mandatory XBRL filing program began as reported by XBRL.US:

As of Sunday, August 10, 2014 9:36:50 AM, there are 3,256,365 problems identified in 107,294 XBRL submissions from 10,112 public companies. The table below summarizes issues that have occurred at least 10,000 times.

Invalid Axis Member Combination 771,269

Negative Value Reported for a Concept that is expected to have a Positive Value 571,692

Required Value that is Not Reported 455,938

Incorrect Date 403,352

Value Reported for a Concept Appears Unreasonably Large or Small 146,331

Changes in Base Taxonomy effect element usage 107,375

Value Reported for a Concept that should be Zero or Empty 77,940

Roll forward Calculates Incorrectly 76,918

Missing Calculation 69,018

Context Date is Subsequent to the Period Reported 63,699

Duplicate Extension Concept 60,893

Incorrect Calculation Weight Used 58,990

Invalid Line Item Used with an Axis 52,381

Deprecated Element is Reported 48,458

Duplicate Value that does Not Match 45,640

Positive Value Reported for a Concept that is expected to have a Negative Value 36,485

Calculation Error 35,094

Invalid unit of measure 28,537

Value Reported for a Concept is Different than the Dimensional Equivalent 23,192

Required Value that Should be Reported if Another Value is Reported 22,989

Cash Flow is Represented as an Accrual 19,561

Negative Value Reported for an Extension Concept 17,604

Incorrect Decimals Defined 15,977

Value that Should be Zero or Empty if Another Value is Not Reported 11,151

 

Clearly, the companies submitting XBRL exhibits to the SEC have some work to do to eliminate errors.  It should also be noted that these errors appear on ACCEPTED XBRL exhibits.  SEC acceptance, although a hurdle every company must clear, does not guarantee XBRL data extracted from the SEC’s website will be useful or comparable.

What’s New in XBRL Errors?

The XBRL community has been aware of errors in XBRL filings since the SEC’s filing program began.  Over time, the errors have decreased as both the software and XBRL service venders have matured and the financial reporting staffs of reporting companies learned more about XBRL.  With this in mind, DataTracks asked Cliff Binstock, Chief Technology Officer at XBRL Cloud, Inc. and provider of industry leading XBRL verification software was asked what the trends XBRL Cloud are seeing with regards to XBRL errors. “We’re seeing a trend toward higher quality returns with fewer errors. The vast majority of XBRL exhibits contain very few structural issues and almost no fundamental technical problems”, said XBRL Cloud’s Binstock. “There are still, however, a small percentage of companies that have not stepped up to error-free XBRL and don’t seem to care.”  The beginning of “Dear CFO” letters from the SEC may soon change that attitude. (See http://www.datatracks.com/xbrl-blog/sec-xbrl-comment-letters-new-staff-observations/ for more details on recent SEC actions to improve XBRL quality)

In addition to the errors listed above, Binstock points to issues with the underlying mapping of financial concepts to XBRL.  According to Binstock, some XBRL is simply not mapping well to the financial statements due to the company’s choice of elements and missing calculations.  Companies should note that in many situations the XBRL will be their financial information of record, not the HTML that gets submitted with the quarterly and annual filings.  Sending a signal to the financial markets that you do not care if your XBRL isn’t correct may cause analysts to wonder what else about the financial information contained in the reports is suspect.

What’s Accounting Got to Do with It?

Most of the checks for errors in XBRL are software attempts to clarify or enforce accounting rules on XBRL documents.  Take two of the top three errors for example.  Negative Value Reported for a Concept that is expected to have a Positive Value, weighing in at error number 2, is a check for an expected positive or negative reported amount dictated by where the value appears in a normal financial statement.  The fix for this error is for accountants to check and correct the instance documents prior to XBRL submissions.

The third most reported error is an error of omission.  Required Value that is Not Reported is an error that is essentially a failure of the internal controls of a financial reporting team.  Companies should be well aware of all reporting requirements and should again have the processes in place to ensure that everything required is reported.  Third party preparers, who may or may not alert your team to missing data errors, are not responsible for missing data.  The next error, Incorrect Date, can again be the result of lax internal controls.

Any Good News Here?

Yes. According to Binstock, there has been a steady improvement over time in the number of companies trying to do things right resulting in a remarkable increase in zero error filings.  As evidenced by XBRL Cloud’s EDGAR Dashboard, which monitors all XBRL filings for errors, the improvements in submissions are coming from two sources.  First, XBRL software has improved with respect to both accounting determinations and following the SEC’s EDGAR Filing Manual.  This improvement is also enhanced by the work of FASB in their efforts to update taxonomies and to provide XBRL guidance for new accounting standards.  (See http://www.datatracks.com/xbrl-blog/us-gaap-taxonomy-as-an-accounting-guide/ for more information about how the US GAAP taxonomy can inform financial reporting teams) “Around fifty percent of filing companies are finding errors or enhancements to their financial reporting prior to submitting their 10Q’s and 10K’s to the SEC.  At least one company found a significant enough error that required re-statement of earnings”, said Binstock.  Companies are finding that correct XBRL can be cost saver when used in both internal and external audit situations.  Plainly said, good XBRL preparation software contains enough accounting rules to filter out some of the mistakes that previously went undetected.  The trend is strong enough to suggest that the majority of things that companies need to fix in the financial closing process are now related to the accounting, not the XBRL.

Why You Need DataTracks

DataTracks reviews all filings for XBRL errors. Companies using DataTracks are already among the leaders in filed data quality. Independent analysis of calculation errors and other best practice adherence have consistently rated DataTracks at or near the top in fewest errors per filing. As a process, DataTracks ensures all detectable errors are handled before delivering XBRL files to companies. Although it is important to note that each company’s XBRL flings are ultimately the responsibility of the company’s management team, choosing a high quality XBRL vender can provide a solid foundation for XBRL excellence. DataTracks US is part of DataTracks Services Limited, leaders worldwide in preparation of financial statements in EDGAR HTML, XBRL and iXBRL formats for filing with regulators. DataTracks prepares more than 12,000 XBRL statements annually for filing with regulators such as SEC in the United States, HMRC in the United Kingdom and MCA in India.

The views expressed are that of the author’s and DataTracks is not responsible for the contents or views expressed therein. If any part of this blog is incorrect, inappropriate or violates the IP rights of any person or organization, please alert us at ceo@datatracks.com. We will take immediate action to correct any violation.

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