We are finishing testing and working on the documentation for the next version of the ExtractionEngine.  We have added some new features that we hope will help with your research.  I will share these as we finish the testing and the documentation for each of the features.

The first item we have completed work on is that we added the ability for you to extract the text only from your search results.  While there is an increased interest in using text mining tools and performing sentiment analysis one blocker has been that most of the text mining software assumes/requires that the input text be in the form of plain text content.  Since most SEC filings are in html our clients have observed that it is painful to extract the text from a set of documents.

We added a new item to the Extraction Menu DocumentExtraction TextOnly.

If you select that option a new UI will start and give you the option to specify the destination directory where you would like the text form of the documents to be saved.  Once you have specified the destination directory and hit the Okay button text only copies of the original documents that were returned from the search will be placed in the specified directory.  Each document will be named in the CIK-RDATE-CDATE-~ form so you have an audit trail back to the source document.  Here is an image of a directory with a collection of filings that have been converted to text.

 

Here is a partial image of an 8-K filing in html format:

Here is an image of the same document after conversion to text:

Since we presume that these txt files will be used as inputs to some additional processing system we have not added line breaks.  The only line breaks in the file are those indicated by the html code so they are a bit painful to read.  However, all of the text is present.

 

 

We have now completed the end-end linkage to make the audit opinions available for download automatically.  Specifically we have connected all of the code pieces that were required to identify the 10-K filings made by Large Accelerated Filers, extract the audit opinion from the filing and then push it to the server that handles your requests when submitted.  Because of the nature of the resources we are using these reports are currently available around 3:00 AM the morning after they are filed. That is if any are filed on Monday – the audit reports should be available to you at around 3:00 AM on Tuesday.

We are also working on providing a summary of the Critical Audit Matters described in the opinions as well as additional meta-data about the opinion.  If you would like to review the current status of this summary detail please follow this link (CAM_SUMMARY).  Below is an image of the current data columns in this file (columns A-E have meta-data that can be used to tie these details back to the actual 10-K filing where the opinion was found

We are specifically identifying the nature of the type of audit opinion (REPORT_TYPE) where the CAM are described (FINANCIAL or COMBINED where COMBINED includes both the opinion on the financial statements as well as the opinion on internal control).  We are also indicating the nature of the opinion and if an exception is noted then it will be reported in the EXCEPTION column.  CAM_COUNT is an integer that indicates the number of CAM listed in the opinion.  And then finally we are currently listing the title the auditor uses to describe the CAM.

Here are some fun facts (only accounting researchers/faculty would call these fun facts) from our initial analysis:

Distribution of CAM counts by registrant:

Five audit reports made mention of 4 CAMs, and 20 listed 3.  Here are the five registrants whose audit reports listed four CAM:

The most common CAM address measurement and impairment issues related to intangible assets (Goodwill generally but also the allocation across various types of intangible).  Both tax and revenue issues are also very prominent in the collection.  I think what surprised me the most is that there are mentions of inventory valuation issues in eight of the opinions.  I am not sure why I am surprised by this as our profession has roots in several frauds involving massive inventory misstatement.

We are isolating the CAM with the plan to create a separate file for each CAM mentioned in an opinion.  We have some ideas as to why this separation will be useful – but more on that later.  We are also developing a standardized taxonomy with the intention of delivering both the original language of the CAMs as described by the auditor and a more parsimonious description that would make using these as inputs to empirical models a bit simpler.  To make this a bit clearer – here are four descriptions of Goodwill Impairment Assessments

Goodwill Impairment Assessment – Cortland U.S. Reporting Unit

Goodwill Impairment Assessment

Goodwill Impairment Assessment – Adtalem Brazil Reporting Unit

Goodwill Impairment Assessment – Company-Owned Reporting Unit

A scan of these suggests these are all similar in nature and could be standardized to allow better sorting and coding.