Common Errors in XBRL Filings with the SEC:

 Now that Canadian firms listed with the SEC are required to file in XBRL, it is useful to consider the kinds of errors that other firms have made with their XBRL filings. Some errors are more common than others.

Sometimes amounts relating to an element are entered as negative because it is known they are to be deducted in the final presentation. However, the taxonomies usually take this into account. For example, there is a calculation linkbase that makes these calculations and uses the amounts as positive amounts. If filers enter them as negative, then the taxonomy deducts the negative values, thus adding it rather than subtracting it. On the other hand, sometimes positive numbers are entered for elements that require a negative value.

Companies can create extensions to the taxonomy being used if they cannot find an element they want in the taxonomy. This is a capability designed to enable companies with unusual financial statement items to create a matching taxonomy element. However, extensions are sometimes created for elements that do exist in the taxonomy but were just missed by the filer. Or incorrect elements are created.

Sometimes a filer simply enters incorrect values into the filing for a particular element. Some of the very basic rules of accounting come into play here. For example, does the balance sheet balance? Do the notes tie into the financial statements?

Sometimes incorrect dates are included in the filings. For example, fixed assets might be disclosed as being acquired on a date after the fiscal year, when it is obvious they were acquired during the year.

Sometimes a required value is not reported and sometimes a value is reported for an element that should be zero.

Sometimes filings are incomplete, with some statements or elements or forms missing.

The filing rules call for detailed tagging, but sometimes such detail is missing.

It’s clear from these errors and others that there is no one answer to avoiding them. Rather there is a need to use the types of procedures usually used in preparing accounting reports, such as independent quality reviews, numeric checks, and data cross-checks.

Audit of XBRL Reports

For several years, an the question of providing audit reports on XBRL filings has been debated by accountants. There are several issues involved:
1. What exactly should the auditor of the XBRL report opine on? The original financial statements have already been audited and an opinion issued. Should the XBRL report draw upon this report or be completely separate?
2. What about the judgements involved in doing the tagging to prepare the XBRL documents? Should these judgements be taken into account? Should the auditors report on those judgements or on the whole document?
3. What about the fact that XBRL documents can't be read by people, just machines? Can they be said to present something fairly if people can't read them?
4. What audit standards should apply to such audit reports?
5. How does the auditor report in such a way that the audit report can travel with the XBRL documents?

These and other questions have plagued standard setters and others. Several documents have been published to address these issues by standard setting bodies and by XBRL International.

The Netherlands has been a leader in this area and now has announced that they are the first in the world to issue digital audit reports in XBRL on XBRL documents. This is a huge step forward and the Netherlands has once again re-established itself as a leader in this field.

For the announcement, check this link.

Canada's Fourth Open Government Plan

The Canadian Government has launched a series of consultations to begin developing their fourth plan for open government. The Third Plan was completed in 2016. This series of consultations is scheduled to be completed in June 2018.

"The Directive on Open Government is Canada’s “open by default” policy, providing clear and mandatory requirements to departments which will ensure that Canadians get access to the most government information and data possible."

At present the Open Government movement is using a variety of data formats driven by the availability of those formats from government departments. In order to get the most out of open data, the data format needs to be standardized as much as possible. This means using a single open data format. None of the formats being used are particularly robust and none are specifically designed for the presentation of financial data, which is an important part of the overall range of data.

Other countries, leaders in the field, such as The Netherlands and Australia, have found that expressing data in XBRL (eXtensible Business Reporting Language) is a useful methodology. It's called Standardized Business Reporting (SBR). With this tool, they are able to facilitate the filing of information with departments at much lower cost to the filers, and make the data available in standardized format. This means that users are given data that is comparable and consistent.

It is hoped that the Government of Canada considers this approach in their Fourth Open Government Plan. For the Open Government website, click here.