When tagging company line items against the standard US-GAAP Taxonomy, it’s tempting to simply find matching standard items without considering their relative position in the taxonomy. So when International Seaways, Inc., using Certent Corporation compliance software, faced a decision on tagging two property expenditures, they decided to do this…
As you can see, the filer changed the familial relationship
between the two items from siblings to parent-child. So what? Well, suppose an investor
wants to do a peer comparison of ‘change in property acquisitions’ over time,
perhaps as a relative growth metric. Since this company tagged an item to total
payments when it’s not, the analysis will be flawed. The investor would have to
sort this out to use the correct data. And worse, knowing that this occurs, the
investor can’t trust XBRL data without doing validation tests to ensure that filers haven't changed the meaning of an item through careless tagging.
In this case, there are two better options.
1. Tag ‘Vessels’
to ‘Capital Improvements’ or ‘Machinery and Equipment’ under the ‘close
enough’ principle.
2. Create an axis called ‘Property Type’, add members ‘Vessels’
and ‘Other’, and use as segments against
the ‘Other Property, Plant and Equipment’
line item.
This is common example of tagging that doesn’t constitute an
error but creates usability problems for investors. Statements should be tagged
using the target taxonomy elements, consistent
with the target taxonomy structure and element relationships. Consistency
with the standard taxonomy's structure could be easily enforced in Certent’s software or by
the SEC.