4 Most Common XBRL Errors: Part Three

XBRL

By Jen Stretch. Reporting high-quality XBRL data is not just a matter of compliance. Financial disclosures are increasingly used as a data source by investors and analysts. It is challenging to compare the data points if the reported values are not accurate. A simple omission of an important element such as EPS may result in misrepresentation of financial results and hamper the analysis. In this blog series we are exploring the four most common XBRL errors.  This part of the series will focus on the error required value not reported.

As the third most common XBRL error, required value not reported accounts for just under 10% of XBRL errors. This error occurs when a required value or a combination of values are not reported as a fact(s) in the instance document. The missing, required elements that cause this type of error consist of common concepts that are either explicitly defined in the US GAAP taxonomy, Accounting Standards Codification (such as earnings per share), or elements in the US-GAAP taxonomy that are defined generically (such as Assets.) It can be difficult to identify missing concepts in the sea of values that make up financial statements, so this error is best prevented by use of a validation tool. However, there are steps you can take to try and prevent them from occurring in the first place.

A required value not reported error indicates that certain concepts or other required elements, such as earnings per share, are not reported in the instance document. Unless you are a non-public company that is not required to report earnings per share, a missing earnings per share fact indicates incorrect XBRL reporting. Usually earnings per share is missing because the concept was tagged with a custom element extension, and since the Accounting Standards Codification explicitly defines this concept, the company’s disclosure of earnings per share will almost always be consistent with the element provided in the US GAAP taxonomy. Another example of an inappropriate custom element extension would be the extension of an assets element. The US GAAP taxonomy defines this element generically in order to avoid unnecessary extensions.

In addition to unnecessary extensions, the required value not reported error is caused by inappropriate US GAAP element selection. The most frequent error related to missing required information occurs on the Cash Flow Statement.

Example: Cash Flow Statement

In the Cash Flow Statement of Exxon Mobil Corporation below (which does not represent their actual element selection,) it may appear that the elements selected for the total of the operating, investing, and financing activities sections are correct. After all, the selected elements appear to be the given total elements, but a closer look at the structure of the taxonomy is required.

Part3

Exxon Mobil Corporation 2015 10-Q

The definition of all three selected elements indicate that discontinued operations are included in the calculation. Since no discontinued operations exist in this statement, however, the selected elements are inappropriate. The actual error that results from this incorrect element selection is the missing Continuing Operations and Discontinued Operations elements that are expected to be included with an element that is defined as the total of both. XBRL US provides best practice guidance including additional information and recommendations on this cash flow statement issue.

This error does not just occur during a taxonomy build, it also occurs when circumstances change, but the associated elements do not. For example, Accounting Standards Update number 2014-08, issued in April 2014, changed the criteria for reporting discontinued operations. This modification caused a number of filers to reclassify disposals from discontinued operations to continuing operations. If all discontinued operations were completely reclassified and the operating, investing, and financing activities total elements were not updated, then the result is incorrectly reported concepts and a required value not reported error.

Being aware of possible XBRL errors is the first step to faster and more accurate reporting. Be sure to read part one of our XBRL errors blog series to learn more about invalid member axis combinations and part two about negative value errors. A Disclosure Management platform can help you avoid these errors with a series of validation warnings. Stay tuned for the next installment of this series where we will explore the fourth most common error: dates.

Jen Stretch