Peter Boritz is the architect and chief technical officer for Snappy Reports XBRL and can be reached via e-mail.

In Part 1 of this four-part post, I offered an overview of the problems associated with XBRL filings; in Part 2, I focused on those associated with the Interactive Financial Report Viewer. Part 3 looked at filing issues in several areas, including taxonomy extensions, negated facts, consistency checks, fact checking, filing path, per share information, and decimals. In this final post, I focus on the detail tagging of footnotes that the SEC mandate requires for companies in their second year of filing XBRL statements.

Technically speaking, detail tagging is a cross mapping of disclosure facts to a reportable element pertaining to the disclosure and any elements that are the subject of the disclosure. These disclosure facts apply to concepts described within the narrative. For example, a disclosure relating to inventory policy may map to both the policies disclosure element and an element for inventory. A detail tag applies to numeric facts within disclosures and refers to elements to which numeric facts pertain.

To put it bluntly, detail tagging is a lot of work. Beginning with the second year of the SEC’s phase-in of XBRL, these requirements are mandated for company financials:

n          Each complete disclosure is tagged as a single block of text

n          Each significant policy within a policy disclosure is tagged as a single block of text.

n          Each table within each disclosure is tagged as a separate block of text.

n          And within each disclosure, each numeric fact (monetary values and percentages) must also be detail tagged.

Detail tagging becomes easier if detail tags map to single paragraphs. Managing disclosures by paragraph provides greater control and better possibilities for detail tagging and compartmentalized analytical searching. Because a detail tag applies to a specific subject (as a written paragraph does, or at least should), you would expect zero-to-one detail tags per paragraph. But this is not necessarily true: a specific paragraph may detail tag to more than one element.

In essence, a detail tag is an XBRL footnote. For each disclosure block, you are creating a footnote to an external element to which the disclosure also pertains. Handled manually, this can be extremely time consuming. In the old days before computer compilers, people would tediously take Fortran code and convert it into assembler. It took a technician to back up a programmer. Similarly, today we have detail tag technicians who manually create footnotes based on detail tagging instructions provided by reporting managers. It does not have to be this way. A good software product should allow you to drag and drop an element onto a disclosure block to create a detail tag. That’s it — no additional effort should be required.

Detail tagging is a difficult process and requires professional proficiency to achieve the quality of cross tagging required. There are over 16,000 elements in the US-GAAP taxonomy. For each text-based data fact, the question arises as to if and how to detail tag. Detail tagging requires human effort and prudence regardless of the best efforts of your software.

Consider the following examples taken from a presentation on detail tagging at the 2009 XBRL US National Conference held in November:

Derivatives

The fair value hedge has a notional amount of $250 million, and hedges approximately 86% of the $292 million of outstanding senior notes maturing in September 2011. The estimated fair value of the contract at September 30, 2009, was $3.5 million.

The possible detail tags may include the following elements:

n          NotationalAmountOfInterestRateFairValueHedgeDerivitives

n          PercentageOfDebtHedgedByInterestRateDerivitives

n          SeniorNotes

n          InterestRateFairValueHedgeAssetAtFairValue

There is obviously a fair amount of skill required by a reporting manager to make the above determination. However, in terms of accountability, there is little the SEC can do to insure the degree of quality required by the above declarations.

 Income Taxes

The Company recorded a tax provision of $25 million, an effective income tax rate of 10.7%, for the quarter ended June 30, 2009, and recorded a tax provision of $170 million, an effective income tax rate of 40.0%, for the quarter ended June 30, 2008.

Here are the elements we’re dealing with: