XBRL: AI against accounting fraud, XBRL in MD&A and the Open Information Model

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Here is our pick of the 3 most important XBRL news stories this week.

1 Machine learning against accounting fraud

Researchers train an AI to detect and forecast accounting fraud committed by Japanese firms, based on a set of accounting variables specifically prepared for the project. Given Japan’s strict, forms based application of XBRL reporting, one wonders whether this could not have been done using the original reporting directly? Are you reading this, Jim Chanos and colleagues?

2 XBRL US comments on SEC proposal on modernising the MD&A

XBRL US responded to the SEC proposal on Management’s Discussion and Analysis, Selected Financial Data, and Supplementary Financial Information. The SEC proposes various reforms to the MD&A and other text-based information in corporate filings, including adding one new section, and eliminating certain sections deemed to be redundant because the reported facts are already available in XBRL format elsewhere in the filing.

XBRL US focuses its comments on the block tagging of MD&A text blocks, whereas the investor advocacy organisation CFA Institute goes well beyond that in its own submission on the same SEC consultation: While mandatory XBRL tagging is a recurring theme, CFA Institute posits that the SEC should apply much stricter enforcement, especially to the A part of the MD&A, and certainly not drop relevant requirements. 

3 Open Information Model (OIM) reaches key milestone

The OIM is a vital part of the modernisation and simplification of the XBRL standard. It will allow XBRL data to be used in new and simpler ways by detaching the standard from a single syntax. This means the same powerful features of XBRL can be used with various different formats, starting with JSON, for simplicity, and CSV, for effectively managing large quantities of granular data. Naturally, XML continues to be fully supported.

OIM will provide critical support to broadening the scope and interoperability with other evolving critical data formats, which should facilitate developments such as the one highlighted in the first item. 

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Christian Dreyer CFA is well known in Swiss Fintech circles as an expert in XBRL and financial reporting for investors.

 We have a self-imposed constraint of 3 news stories each week because we serve busy senior leaders in Fintech who need just enough information to get on with their job.

 For context on XBRL please read this introduction to our XBRL Week in 2016 and read articles tagged XBRL in our archives. 

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