To document issues related to financial data filed using XBRL, AsReported.com has developed a metric - QUALITY SCORE - that measures the usability
of XBRL filings from the standpoint of serious investors, analysts and researchers who demand a
high level of standardization. In the process of building AsReported.com’s
standardization engine (which corrects all of the problems discussed here), there were 7 categories of ‘errors’ that made full standardization
of the primary statements difficult. I use the term ‘error’ loosely because the
lack of definitive filing rules in certain of these categories allows companies
wide discretion to make choices that are often inconsistent with the goal of
comparability with other companies.
Here is the scoring summary by filing software for 10K and 10Q filings made in 2017. (***note that this is a revised version of the original table, adding almost 2,000 scored filings and correcting an issue related to element relationship disclosures)
Here are the components of QUALITY SCORE:
ERRORS - TAXONOMY. The US
GAAP taxonomy consists of 5 separate sector-based taxonomies: commercial,
deposit-based, securities-based, insurance-based, real estate and REIT. Each
has its own primary statement structures and elements. Some overlap, but many
are specific to the taxonomy. Often companies in one sector will use elements
from another sector in its filing, rather than an equivalent element in its own
taxonomy. This requires creation of a link to an element from the correct
ERRORS - SECTION. Breaking down the primary statements into sections and blocks
is very useful in standardization. Examples of sections are current assets,
non-current assets, current liabilities, etc. When a company item is tagged to
an element from the wrong section, it requires mapping back to the correct
ERRORS – PERIOD TYPE. Elements are characterized as either ‘static’ or
‘duration’. When an element with the wrong period type is used, it requires
4. INVALID TOTALS.
An important feature of XBRL is the
requirement that relationships between elements be specified. This allows
statements to be easily audited and quickly reveals discrepancies. And yet,
filings are made with incorrect totals, or incorrect relationships, or missing
elements, or all of the above. These errors could and should be revealed by the
filing software, or by SEC enforcement testing.
5. MISSING RELATIONSHIPS.
One reason for invalid totals is that element relationships (called calculation
arcs) are often simply not specified.
ROLLUPS. When an element is broken down into segments by product or
geography or another company-specific breakdown, it’s done with dimensions.
Long-term debt might be shown by issuances in this way. Dimensions provide
great flexibility in financial reporting, but it’s good practice to roll-up the
components into a total value for the element, ensuring comparability.
ERRORS. If a specified element relationship is inconsistent with the
relationship expressed in the US GAAP taxonomy, then its sign will be
inconsistent and require changing. It’s not possible to compare companies using
dissimilar signage in their statements.
Exceptions under these 7 tests are totaled to Total Quality
Issues and divided by the number of primary line items to arrive at QUALITY SCORE. These issues are within
the control of the filer and the filing software.
Example Quality Score detail:
Note that an additional measure is shown - USABILITY SCORE - that takes into account the number of extensions, or custom tags, which inhibit full standardization (and hence comparability) of reported financial results.