XBRL Cloud's Analysis Exemplifies SEC's Goals: Financial Reporting Interactivity and Transparency

[Miles P. Jennings, Jr.]

With the permission of the author, I have placed Cliff Binstock's
"XBRL Cloud EDGAR Report" at the top and center of the XBRL Network's main page. To me, this web application is an amazing example of all those reporting goals that former SEC Chairman, Christopher Cox, was espousing...that is, to allow transparency of financial reporting so the public may access and analyze the data.
And congratulations to the SEC---XBRL works and can be accessed and manipulated by analysts and the public. If you study Binstock's report, it digs down into the filings and displays various inconsistencies in the reporting vs. the EDGAR rules. The mere fact that Binstock could capture the filed data and extract and display individual company data and variances from standard is just incredible.

Binstock's report is a wake-up call for financial analysts, auditors, and corporate CFOs. XBRL has made the study of large pools of public financial data possible. The current reports are based on 10-Qs for reporting periods after June 15, 2009. These reports, of course, are unaudited. As companies go through the annual auditing process, their own filing variations from the SEC's EDGAR rule book will be scrutinized. Internal policies will be set. And, of course, similaraly, the SEC will review its own rules. Let's face it, the current XBRL taxonomy is the first formal whack at the standard's implementation. Both corporations and the SEC will gradually refine the filing process. And, no doubt, this year corporate auditors will be carefully establishing how companies file and the adequacy of their internal rules for filing.

What is thrilling to me is the fact that an individual (Binstock) took public data and concluded that there are filing variances between companies. This is a whole new world of financial analysis. Now, financial analysts can try to understand why a company filed the way they did. Building a financial reporting standard where exceptions to filing rules can be revealed by public analysis is a great accomplishment. Just imagine trying to take a 100 paper filings and generate the detail of the XBRL Cloud report! Or cut and paste the data to a spreadsheet and read their accounting footnotes at the same time to dope out how the companies differ in their reporting!

As a corollary, whenever there are exceptions or variations in fling, XBRL allows the user to open up the relevant filed data to get a further contextual understanding of the company's filing. This lets the sunshine in. You can screen and scrutinize rather than break your wrists in handling continuously updating financial reports. [I'm reminded here of Newman in Seinfeld where he exclaims something to the effect that the mail keeps coming!! XBRL-izing data is a huge accomplishment.]

The XBRL Cloud report will inspire professional financial analysts to go way-deep into their sector's financials and understand and compare the respective companies' reporting policies. It gives me a headache thinking about doing this with paper or cut-and-pasted data...a real headache. By using tools that will be developed to handle XBRL data, analysts will quickly see and understand variations in reporting.

And let's face it, the SEC is not under any illusions that they can make perfect cookie-cutter rules to handle all companies' reporting. That is why they allow extensions of the definitions, allowing non-standard businesses to file data and be compliant---and why they have different XBRL taxonomies for certain major industries.

As a member of the public, I do not have validation machines to analyze filing methods. However, the world markets have converged on this new XBRL standard. And I suspect that more and more available studies---like that of XBRL Cloud---will become accessible for the public to use. There are a lot of garage analysts out there who will now be free to discover extreme over- and under-valuations of securities... and why.

And just a note to those who find this XBRL Cloud study of interest, I hear from Binstock that he hopes to have the report in SEC real-time very shortly.

It is my hope that some professional financial theorists and market students will analyze the trends here, stemming from the availability of having as-reported data available on corporate filers. The granular data will take on infinite forms of presentation and analysis; and the deliverability of that XBRL data will be on-the-fly, worldwide, and instant.

Whatever the variances in initial filings, the SEC has achieved an amazing accomplishment in building a whole new standard for financial reporting. Now, companies, auditors, and the public will examine XBRL data, dig and dig down further to find new and actionable data.

In creating this one report Cliff Binstock's XBRL Cloud has demonstrated that we have a new '1984' on our hands. Congratulations to Cox, the SEC, and XBRL jurisdictions in making it possible.