It’s instructive
to view how publicly-traded compliance software companies prepare their own
XBRL filings. After all, these are the XBRL experts. There are two such
companies – Workiva (WK) and Donnelley Financial (DFIN). This blog compares
their most recently reported income statements.
In this
statement, the components of [Net Sales] are correctly shown on the [ProductOrServiceAxis].
Then, Donnelley inexplicably abandons dimensions in reporting [Cost of Sales]. [Net
Sales] and [Cost of Sales] should have a consistent taxonomy, sharing the same
domain elements. Why is this important? Analysts care about margins. In this
case, calculating gross margin by sales
type requires manually aligning domain elements with primary elements. While this
XBRL data may be machine-readable, it’s no longer machine-understandable.
Then
Donnelley determines that both [Cost of Sales] and [SG&A] should be custom
items to highlight the exclusion of [D&A]. [SG&A] in the standard
taxonomy doesn’t include [D&A], so that extension is unnecessary. And while
[Cost of Sales] in the standard taxonomy does include [D&A], very few
companies explicitly include or exclude the item. And [D&A] can always be
reconciled against the cash flow statements disclosure of total [D&A]. In
any case, the [D&A] clarification can be made with custom labels without
defeating the statement’s comparability.
This statement constitutes a well-formed, compliant reporting
model. No extensions, no block errors, no taxonomy errors, no validation
errors, no missing or erroneous relations. Revenue and Cost of Revenue are
described using the same structure and domain members.
CONCLUSION
Judging
solely from this example, Workiva gets it. Donnelley doesn’t. The purpose of
XBRL is to achieve comparability by converting statements to a standard
taxonomy. Donnelley’s extended taxonomy model is both non-standard and
inconsistent, inhibiting users’ ability to easily digest the data. Workiva’s
presentation is more user-friendly, producing statements that can be both read
and analyzed.