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SEC Announcement on Negative Values in XBRL: Don't Say the Opposite of What was Meant to be Said

Lou Rohman, Vice President, XBRL Services, Merrill Corporation | August 02, 2016

SEC Announcement on Negative Values in XBRL; Don't Say the Opposite of What was Meant to be Said

Saying the opposite of what was meant to be said usually creates a lot of confusion. That's the case for SEC XBRL filings in which a company erroneously enters a negative amount in the XBRL file when it should be a positive amount. The company is saying the exact opposite of what was meant to be said.

For example, assume a company shows the following disclosure in its printed financial statements: "The sale of property, plant and equipment resulted in a gain of $35 million and a loss of $20 million for the years ended June 30, 2016 and 2015, respectively." In the XBRL document, the $35 million should be a positive amount since it's a gain and the $20 million should be a negative amount since it's a loss. That makes sense.

However, because both numbers appear in the written disclosure as positive amounts, too often both amounts are entered into the XBRL file as positives. The erroneous result is that the company is saying it had a gain of $20 million when it actually had a loss of $20 million for the year ended June 30, 2015.

The SEC is very aware of this negative/positive problem, and to shine more light on the topic, the SEC's Office of Structured Disclosure recently posted an announcement about "Negative Values". Apparently the confusion caused by these erroneous positive/negative values has grown in severity, especially due to the increased use of XBRL by investors and the SEC. Consequently, the SEC is telling filers to take notice of the issue.

Adding to the heightened awareness of this situation is the set of automated rules recently published by the XBRL US Data Quality Committee. Can you guess which one of those rules has had the biggest impact and has exposed the most errors? It's the one that identifies erroneous positive/negative amounts in XBRL files. The timing of the SEC's announcement appears to coincide with the publishing of this automated rule, which has exposed many erroneous positive/negative amounts in recent SEC filings. 

I'm an active member of the Data Quality Committee and I know very well the magnitude of the confusion caused by erroneous positive/negative amounts, and the frequency of their occurrence. These errors need to stop promptly. The SEC announcement and the Data Quality Committee rules are a big step toward that.

And of course, sometimes there aren't consequences for saying the opposite of what you meant to say. A friend recently commented about a topic we were discussing by saying "I could care less!" What he meant to say was "I couldn't care less!" It didn't matter that he said the opposite; we knew what he was trying to say. But those days appear to be over for SEC XBRL filings. The improper amounts are causing too much confusion and the SEC is making noise about it.  

Make sure the positives and negatives you're communicating are exactly what was meant to be said, not the opposite.

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