Your XBRL Extension Taxonomy: It’s Not Just About Adding New Tags

Written by Chethan Gorur     Posted on February 11, 2010

Chethan Gorur is the Director of Interactive Data at Trintech, Inc. He is also Chair-Designate of the XBRL International Standards Board.

For many businesses filing their financial statements using XBRL to comply with the SEC mandate, the phrase “extension taxonomy” is a largely misunderstood term.  There is a narrow view that it is only about adding brand-new company-specific elements which do not exist in the base taxonomy (Ex: US GAAP 2009). While adding new elements is definitely one of the purposes for creating extensions, there are many other drivers for creating an extension taxonomy. Even though some of the principles apply for other scenarios, this blog post specifically refers to extension taxonomies as they are used to meet the SEC XBRL mandate for operating companies.

The reality is that almost all of the XBRL filers to date have created a barebones extension taxonomy. Because you’ll be delivering your own unique extension taxonomy to the SEC – and a slightly modified version of the taxonomy with every quarterly and annual financial statement you certify – it’s important to understand the component parts of the document, and some basic rules to help guide you in developing it.

An extension taxonomy is not just about a new set of tags (or elements). Elements are actually very specific pieces of information, and the XBRL US GAAP Taxonomy Preparer’s Guide advises preparers to first determine if it is possible to use more general – and less specific – extension tactics.These higher-level tactics can be re-used in future periods, resulting in much less effort over time.

You can tackle creating an extension taxonomy by thinking about it as an upside-down pyramid: begin with the most general set of extension tactics, and see if that suits your purposes. If not, move to a lower level, where more specific information is required. For the purposes of this blog post, we’ve grouped the twelve methods of extending the taxonomy under four, easily remembered headings, listed mostly by the increasing levels of impact that the tactic will have upon future re-usability.

1. Relationships Help Present Your View

It is recommended that companies perform the following at a minimum: (1) create new Relationship Groups, and (2) change the Ordering of existing relationships defined in one of the Industry Entry Points. These methods of extending the XBRL US GAAP Taxonomy have the most capacity for future re-use.

A new Relationship Group allows preparers to assemble custom presentation relationships between already existing elements, tables or existing groups.

Changing the Order is as simple as reordering the children in an existing list.

In some cases, simply modifying relationships within one of the existing Industry Entry Point taxonomies can be sufficient for a business to complete their own extension taxonomy. For example, you might need to modify the order of a list as follows:

Industry Entry Point Cash Flow Statement – US GAAP Taxonomy Order	Your Company’s Cash Flow Statement – New Extension Taxonomy Order
Net Cash Provided by (Used in) Investing Activities, Continuing Operations	Net Cash Provided by (Used in) Investing Activities, Continuing Operations
…	…
Payments for (Proceeds from) Mortgage Servicing Rights	Payments for (Proceeds from) Investments
Payments for (Proceeds from) Investments	Payments for (Proceeds from) Mortgage Servicing Rights
…	…

It is also possible to (3) add New Relationships between existing elements. An example would be creating a new calculation for multiple elements.

Preparers can also (4) suppress or change a Parent-Child Relationship; however, this is typically done only to resolve a validation error or calculation inconsistency.

Adding New Relationships or suppressing Parent-Child Relationships both have slightly more impact on future re-use of the extension taxonomy, and should be investigated only after determining if the labeling methodologies below can first do the job.

2. The Role of Labels

The SEC recently presented its findings from a review of the Year 1 XBRL filings recommending that an “element label should match its line item caption”. It is recommended, especially for any kind of tabular data, to modify the labels on elements (especially tabular information) to match your financials.

There are three ways labels could play a part in your extension taxonomy: change the Preferred Label on a Presentation Relationship, add a new Abstract Heading Element, or simply add or change Element Labels.

• Changing a Presentation Relationship’s Preferred Label helps dictate how data is displayed. An example would be to change the preferred label on a line item’s presentation relationship from “Terse” to “Negating”, ensuring that the numerical data displayed for that line item has its sign flipped.
• Adding a new Abstract Heading Element simply provides a new heading, under which child items can be grouped. Preparers should first determine if they can modify the label of an existing abstract element prior to creating a new one.
• Adding or changing Element Labels does not modify the element’s definition or references, both of which are the crucial pieces of data used to define that element. This is always preferable to creating a new element, which is described below under the section on elements, and has less future potential for reusability.

Of all labeling methodologies, the Preferred Label on a Presentation Relationship concept is the most difficult for people to understand, and warrants further explanation. Every tag or element has several different types of display labels, each of which can be used in different places throughout your financial statement without modifying the underlying data.

Element or “Tag”	Possible Labels for the Element or “Tag”	Element or “Tag” Preferred Label (as defined in the Presentation Relationship)	Displayed On Your Financial Statement
[Goodwill]	Label Type Resulting Label to be Displayed Standard Goodwill Period Start Goodwill, Beginning Balance Period End Goodwill, Ending Balance Terse Goodwill, Additions Negating (Less) Impairment … …	Period Start	Goodwill, Beginning Balance

Different parts of your financial statement can reference different label types using Preferred Labels, changing the information displayed on your financial statement without actually changing the tag itself, or the underlying data. In one section of your financials, you might want to change the preferred label for [Goodwill] to “Period End” in order to display “Goodwill, Ending Balance” on your financial statement.

3. Extensions and XBRL Tables

XBRL Tables are powerful constructs, allowing you to group, display and reformat data – all without changing the underlying relationships between the data included in the table itself. For the purposes of this blog post, we will assume that readers have a basic understanding of XBRL tables and terminology, which can be found in Chapter 5 of the XBRL US GAAP Taxonomy Preparer’s Guide.

There are three ways to extend using tables, add a new (8) Domain Member to an Existing Table Domain, add a new (9) Axis to an Existing Table, and add a (10) New Table.

• Adding Domain Members is one of the most common ways of extending taxonomies, especially as you get into detailed tagging. As an example, the Domain “Major Types of Debt and Equity Securities” might be composed of the following Domain Member Elements: “U.S. Treasury Notes”, “Corporate Debt Securities” and “Equity Securities”. Adding a new Domain Member Element to an existing Domain essentially adds a new table column, into which you can add financial data.
• A table Axis contains one or several Domains. Adding an Axis to a table allows you to group Domains together for more complicated reporting requirements. Imagine that you are reporting “Assets by Type” (your Axis) and need to also break them out by “Assets by Location” (your new Axis). Adding the new location Axis would allow you to create a master column by asset type, under which assets by location could be individually reported.
• Before adding a New Table, first determine if you can modify one of the tables available in the existing XBRL US GAAP Taxonomy Industry Entry Points, either by adding Domain Members or Axes as described above. Adding a new table is more difficult than modifying an existing one – requiring that you modify, create or define additional elements, attributes, and relationships. But in some situations it will be necessary.

The example below illustrates how adding a new Axis can help you group data for more detailed reporting situations than the standard taxonomy might allow. In this scenario, the Axis “Reporting Segment” was added to the original table, facilitating this grouping:

(In thousands)	Custodial Services		Office Furniture		<< Axis 2 “Reporting Segment”
	US Federal Government	State of Maryland	US Federal Government	State of Maryland	<< Axis 1 “Major Customer”
Entity-Wide Revenue, Major Customer, Amount	$$	$$	$$	$$	<< Line Items “Entity-Wide Revenue, Major Customer”

4. Add New Elements Only When Required

So far, so good. We’ve made it through nine of twelve methods to extend the existing taxonomy to suit your unique business situation – all without creating new elements or tags. But in some cases, you’ll need to do just that. As we’ve already said, creating new elements or tags has the most impact on future re-use, so do your best to repurpose what already exists prior to extending using the methods below. This is one of the areas which has the highest impact on comparability of data across companies – and will be one which regulators will watch very closely.

Adding new elements should only be done once the existing taxonomy has been completely reviewed, including documentation on existing elements, to determine if one of the methods above can first suffice. If not, there are two ways to add a new element: adding a new (11) Numeric Element, or adding a new (12) String,Text Block or Other Non-Numeric Element. The scope of this post is not sufficient to cover the ins-and-outs of creating new elements, the details of which can be found in Chapter 6 of the XBRL US GAAP Taxonomy Preparer’s Guide.

There are some good rules of thumb to follow:

• You will usually need to add a new Numeric Element in two situations: if you need to combine two or more line items into a single element or if you need to introduce entirely new financial reporting concepts which are not covered in the existing taxonomy. Every new Numeric Element requires both a definition, and a presentation relationship to at least one other element. When you are adding new elements it is very important that you take the time to document the purpose and reasoning behind the same. It’s usually a good idea to go ahead and develop at least one calculation relationship to one or more other elements for all Numeric Elements you create.
• Adding a Non-Numeric Element (such as a text block or string) is performed when the existing tags don’t meet your needs, especially for block tagging of complete notes, individual accounting policies or tables/schedules. Non-Numeric elements do not participate in calculation relationships and you cannot validate content inside it using traditional calculation relationships.

Conclusion

Extension taxonomy documents are as important as the Instance documents you submit to the SEC. Special attention must be paid to the contents of the extension taxonomy. Extension taxonomies are much more than just about adding new elements; they include changes to Relationships, Labels, XBRL Tables, and more. Even if you have completely outsourced your XBRL preparation, it’s important to work with your outsourced provider to understand what goes into your extension taxonomy since it is one of the documents that you will be filing with the SEC.