In preparing XBRL filings, the process of
tagging a company's line items to the standard US GAAP taxonomy is arduous.
There are, after all, more than 20,000 standard items to choose from. But if
the process is informed by the millions of tags that comprise the past 9 years
of XBRL filings, the task is much less daunting. In fact, it's crucial to the
usability of XBRL data that companies use this knowledge-base and make a
reasonable effort to conform the with the group consensus. If consensus
tagging resulted in greater tagging uniformity, it would begin to
fulfill one of the principle goals of XBRL - comparability. Data that is more
comparable is more valuable to investors and will ultimately lower the cost of
standardized data generally, another goal of XBRL.
Consensus tagging is important for all tagging decisions,
but particularly for decisions to use extensions, or custom tags. Extensions
sabotage XBRL's purpose of standardizing financial data using a common
language with a fixed set of concepts. The concept list is not fixed; it’s
ever-growing due to extensions. The dictionary changes every day. Extensions
are allowed by the SEC, but as a last resort, when no standard item comes close
to the meaning of the company's item.
Unfortunately, every company interprets this
admonition differently. Take the example below. Psivida Corp. (using Donnelley
Financial software), created an extension for ‘Amortization of Debt
Discount’. That’s odd, because it’s a very common item. And as you can see,
two search methods (exact and partial matching with frequency counts) and an
expert system (using block terms) arrive at a consensus standard tag for this
item. Had consensus tagging results been integrated with the
filing software, it’s unlikely that a custom tag would have been created.
This is not uncommon. In fact, further down
the statement is another extension – Deferred Rent – that also
has a strong consensus tag.
Most extensions can be avoided in this way. In
addition, the flexibility of XBRL allows filers to: 1) choose a standard tag
with approximately the same meaning as their item, then apply a label to convey
the exact meaning, or 2) create a new axis off a standard line item and
represent their item as a domain member. Both approaches are within the
rules and both preclude the need for extensions that break the standardization.
So XBRL tagging shouldn't be done in
isolation. Indirect collaboration via consensus tagging can
substantially improve the usability of XBRL datasets.