Understanding FactsFinancial Report Semantics and Dynamics Theory
Overview• Facts – Value – Additional traits of numeric fact values – Characteristics – Parenthetical explanations
Fact Fact Value 2000 1000A fact is a piece of information. Financial reports communicate facts. Factsreported by a financial report can be numeric, text, or even prose.For example, the two facts above with the values of “2000” and “1000”.
ValuesProse: Textual: Sed elementum feugiat augue. Nam non tortor non leo porta bibendum... Numeric: 1147 A value is the piece of information being reported. The screen shot of a financial statement note above which discloses information about commitments and contingencies shows three types of values: numeric, textual, prose. Numeric and textual are rather straight forward. Prose can be thought of as information which has sophisticated formatting: paragraphs, tables, lists, etc. Generally prose should be read in a specific ordering or sequence.
Additional traits of numeric fact values Value 2000 1000Numeric facts have two additional and important traits: units and rounding. Unitshelp computers understand if the numeric value is expressed in say US Dollars,Euros, shares, per share, etc. Rounding helps to understand what can be thoughtof as the significant decimal places of the number; it the number expressed to thenearest thousands, to the dollar, or to the penny.Computers need this information to work with the numbers correctly; both forprocessing computations and in generating renderings of the numeric information.
Characteristic Concept Value Revenues 2000 Net income 1000A characteristic describes a fact. Characteristics helpyou understand a fact.For example, a characteristic of the number “2000”above is that it relates to revenues as opposed tothe number “1000” which relates to net income .
CharacteristicsReporting entity Legal entity Period Concept ValueABC Company Consolidated entity Jan 1, 2011 to Dec 31, 2011 Revenues 2000ABC Company Consolidated entity Jan 1, 2011 to Dec 31, 2011 Net income 1000 Financial facts can have a number of characteristics. For example, some common characteristics include the reporting entity, legal entity, period, and concept which describe a reported financial fact.
FactReporting Legal entity Period Concept Value Units RoundingentityABC Consolidated entity Jan 1, 2011 to Dec 31, Revenues 2000 US Dollars ThousandsCompany 2011 of dollarsABC Consolidated entity Jan 1, 2011 to Dec 31, Net income 1000 US Dollars ThousandsCompany 2011 of dollarsSo the fact is the value (including the traits which further describe numeric values) and all of thecharacteristics which describe the value.So above we know that the value “2000” is for the concept “Revenues”, for the period “Jan 1, 2011 to Dec31, 2011”, relates to the legal entity “Consolidated entity”, of the reporting entity “ABC Company”. We alsoknow that the numeric value is expressed in the units US Dollars and are rounded to the nearest thousandsof dollars.Further, the example above contains two facts.
Parenthetical ExplanationsParenthetical explanationParenthetical explanation Facts may have parenthetical explanations which provide additional descriptive information about a fact. For example, information contained within a line item of a financial statement or as a footnote on the bottom of the page of one of the financial statements are examples of parenthetical explanations.
Summary• Facts – Value – Characteristics – Additional traits of numeric fact values – Parenthetical explanations