Business+Rules

=Business Rules=

Financial reports follow specific business rules. These rules can be broken down into categories or sets of rules. Rules can apply to all financial reports, a specific infustry/activity, or may be specfic to a reporting entity. The following is a summary of these business rule sets or groupings.

US GAAP Domain Level Semantics (Business rules)
There are a number of business rules which exist and are generally true for all entities who report financial information. While the concepts may be different for US GAAP and IFRS, both reporting schemes are similar in this regard. Basically, a financial statement is defined as a balance sheet, an income statement, a statement of comprehensive income, a cash flow statement, and a statement of changes in equity. See this IFRS/US GAAP Comparison Wiki for information on how both reporting schemes define a set of financial statements. This comparison of IFRS and US GAAP by Grant Thornton has similar information.

As such, the following can be said to be true about financial statements for every financial statement:
 * Balance sheets report assets, liabilities and equity, equity.
 * Balance sheet balances: assets = liabilities and Equity
 * Assets and liabilities and equity foot: assets foot, liabilities and equity foot
 * Income statements report net income (loss)
 * Income statement foots: The line items of an income statement foot to net income (loss)
 * Cash flow statements report net cash flow; net cash flow is broken out between operating, financing, and investing activities
 * Cash and cash equivalents roll foward reconciles: beginning balance of cash and cash equivalents + net cash flows = ending balance of cash and cash equivalents.
 * Changes in equity foot and reconcile: Changes in equity reconcile and balances tie to balance sheet (US GAAP only, under IFRS, a reconciliation is provided between cash and cash equivalents per the cash flow statement and the balance sheet.

The following are US GAAP Domain Level Core Financial Report Semantics expressed for the various versions of the US GAAP Taxonomy: 2012, 2011, 2009

Industry/Activity Level Semantics (Business rules)
Different industries/activities report financial information in different ways depending on the industry. For example, although a classified balance sheet is required for most industries, certain industries are allowed to report an unclassified balance sheet.

The following are Industry/Activity Level semantics for the US GAAP Taxonomy: 2012, 2011, 2009.

Consistency checks (Business rules)
The following are checks of the consistency between reported facts within a financial report. For example, for all classes of preferred and common stock authorized shares must be greater than or equal to issued shares; outstanding shares must be greater than or equal to issued shares.

The following are consistency checks for the US GAAP Taxonomy: 2012, 2011, 2009

Reportability rules (Business rules)
The following are checks of reportability of facts within a financial report. For example, if outstanding shares of preferred or common stock are reported, then it is the case that issued shares and authorized shares should also be reported. Or, if inventories is reported on the balance sheet, then inventory policies are llikely reported.

The following are a rough set of reportability checks for the US GAAP Taxonomy: 2012

Reporting entity specific rules (Business rules)
Each enity who issues a financial report has their own unique set of business rules which they follow within their report. This includes mathematical computations and other such rules. However, reporting entities may not break domain level or industry/activity rules generally or must have a strong justification for doing so.