Last week, the SEC issued an “announcement,” regarding the ongoing issue of labeling negative values in XBRL files. Their post, below, is a little vague in its purpose – sort of the regulatory equivalent of the poopy emoji. The recipient is not quite sure if they’re in trouble or not. Well, you’re not in trouble, however the SEC’s next step, if you’re reporting team does not heed this, may be an official CFO letter. Frowny face emoji.
Here is what is happening:
Think of XBRL “tagging” as the underlying code BENEATH the visual “spreadsheet” representation of your financials. What the SEC is seeing, quarter after quarter after quarter, is that companies are using “minus signs” or brackets in the XBRL to signify a negative number. No doubt this is human muscle-memory from years of working in MSExcel. The problem is, the number is also tagged as using a tag with a negated label within the underlying XBRL code. The result is that a double negative is created… which then calculates that number as a positive.
For clients that are working with a full-service XBRL agent, like Vintage, that mistake is generally found as we are a second and often a third pair of eyes. Where this double negative is slipping past is with companies that are 1.) self-filing using DIY SaaS platforms or 2.) working with very low-end (poor QA) agents.
It is important to note, poopy emoji aside, this SEC announcement is a warning. It’s also one of the first issues we undertook as a founding member of the XBRL US XBRL Data Quality Committee. XBRL quality is serious situation and your CFO and CEO are liable if the SEC wishes to steel up – which they are evolving to.