July 8, 2014

XBRL: SEC Staff Provides First Guidance In Years

I was surprised to see this set of “observations” issued by the SEC’s Division of Economic and Risk Analysis yesterday about XBRL exhibits and custom tags, as well as this sample letter from Corp Fin about calculation relationships. It has been nearly three years since the SEC last weighed in on XBRL, so I was starting to think that the SEC had given up the ghost in this area. I continue to read stories that not too many investors use XBRL – and then you see media pieces like this Reuters article entitled “U.S. House panel probes obsolete technology at SEC.” Another indicator – I just checked the links to the XBRL-oriented blogs in our “XBRL” Practice Area and nearly all of them were dead…

For most companies, the SEC’s limited liability protection for XBRL has expired – and it will expire entirely for all companies in October 2014. Meanwhile, this MoFo blog reports that NASAA is considering a model rule for electronic blue sky filings (here’s the proposed rules)…

XBRL: Negative Values? What Does One Do?

Recently, a member asked “Do you have any gloss on how companies are dealing with issues regarding glitches in their XBRL tagged data?” My answer is that I have no idea whether companies amend their periodic reports to fix this issue. A while back, Corp Fin discussed the issue in a section entitled “Negative Values” within its December 2011 edition of its “Staff Observations from the Review of Interactive Data Financial Statements.” And I do know XBRL US issued this white paper a few years ago discussing this, as noted in the excerpt below:

“The most common problem, which comprised 64% of all errors, occurs when companies use signs on values incorrectly. Here is an example of a plastic materials and chemical company that reported “DividendsCommonStockCash” as a negative value when it should have been submitted as an absolute, positive value. The company tagged the values based on how they wanted it to be rendered, not on how the data should be input. They formatted the XBRL data with presentation in mind. It’s critical to remember that XBRL formatting produces “data” not “reports”. If data is incorrectly signed, the computer-readable data will not be correct even if it renders the way the company wants.

The US GAAP taxonomy is structured to interpret “DividendsCommonStockCash” as a reduction to retained earnings (e.g., negative), so that when a company inputs the value as a negative, it becomes an increase to retained earnings. This creates a “double negative”, essentially flipping the sign so that it becomes positive. The company used a negated label to make the data appear negative when rendered. In the screen shot below showing the SEC’s Interactive Data Viewer, the figure appears with the correct sign (negative) but the machine-readable XBRL data is incorrectly signed and anyone extracting this data for analytical purposes would be pulling incorrect information.”

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