Wednesday 5 September 2012

Comparing XBRL - Step 2: Standardisation

As I may have said before, when a company prepares a financial report, it's principal aim is not to create comparable data but a narrative that best explains its financial position and its potential for changing it. XBRL helps to close the comparability gap but this isn't a guarantee or automatic.

So a company in it's use of XBRL may well create a coherent financial view but not necessarily a complete one. In other words if you tried to fit the data to a standard chart, there might (and probably will) be gaps.

This is how revenue is standardised in XBRL to XL. You can see that Microsoft discloses a figure in XBRL for sales revenue but Oracle doesn't. Oracle does disclose a figure for (total) revenues but Microsoft don't! In fact Oracle disclose all sorts of revenue figures...

So how do you compare revenues for both companies? Well XBRL to XL at the moment does this in a rather clumsy way - it creates it's own comparative total (Total Revenues) which it does by adding up all the things it thinks is revenue as an Excel formula. Now for this formula to be truly complete it would need to include all the following items....

In fact that's not all of them, that's not even a third of them. That's only the ones I could fit in my screen shot whilst zooming out as far as I dare.

The issue of standardisation I'm sure is an issue that will be discussed at length at the data forum in next weeks national XBRL US conference in Austin, Texas.

It even gets it's own webinar - Standardizing XBRL a week later. So it must be on somebodies mind. It certainly is mine as will become clear in future instalments.

I'll be at the conference so if you see me, please say Hi. I even have a stand - Woooh! - well more of a table.

No comments:

Post a Comment