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XBRL-based Digital Financial Report Analysis Report

Review by: Thomas McKinney, CPA and Charles Hoffman, CPA

March 28, 2019

This report provides a comprehensive assessment of the XBRL-based financial report created for

Microsoft, Inc. which was submitted to the U.S. Securities and Exchange Commission1. The purpose of

the analysis is to provide feedback as to the true and fair representation of information within the XBRL

technical syntax format to make sure the meaning conveyed via the XBRL format and the information

conveyed via the HTML format are consistent in terms.

The analysis performed is consistent with and leverages the spirit of the Method of Implementing a

Standard Digital Financial Report Using the XBRL Syntax2.

SEC Filing Page:

https://www.sec.gov/Archives/edgar/data/789019/000156459017014900/0001564590-17-014900-

index.htm

XBRL Cloud Evidence Package:

http://xbrlsite.azurewebsites.net/2017/Prototypes/Microsoft2017/evidence-package

XBRL Cloud Reporting Checklist and Disclosure Mechanics:

http://xbrlsite.azurewebsites.net/2017/Prototypes/Microsoft2017/Disclosure%20Mechanics%20and%2

0Reporting%20Checklist.html

XBRL Cloud Viewer:

https://edgardashboard.xbrlcloud.com/flex/viewer/XBRLViewer.html#instance=http://www.sec.gov/Arc

hives/edgar/data/789019/000156459017014900/msft-20170630.xml

1 Microsoft 2017 10-K, https://www.sec.gov/Archives/edgar/data/789019/000156459017014900/0001564590-17-

014900-index.htm 2 Charles Hoffman, CPA and Rene van Egmond, Method of Implementing a Standard Digital Financial Report Using

the XBRL Syntax, http://xbrlsite.azurewebsites.net/2019/Library/MethodForImplementingStandardFinancialReportUsingXBRL.pdf

https://www.sec.gov/Archives/edgar/data/789019/000156459017014900/0001564590-17-014900-index.htmhttps://www.sec.gov/Archives/edgar/data/789019/000156459017014900/0001564590-17-014900-index.htmhttp://xbrlsite.azurewebsites.net/2017/Prototypes/Microsoft2017/evidence-packagehttp://xbrlsite.azurewebsites.net/2017/Prototypes/Microsoft2017/Disclosure%20Mechanics%20and%20Reporting%20Checklist.htmlhttp://xbrlsite.azurewebsites.net/2017/Prototypes/Microsoft2017/Disclosure%20Mechanics%20and%20Reporting%20Checklist.htmlhttps://edgardashboard.xbrlcloud.com/flex/viewer/XBRLViewer.html#instance=http://www.sec.gov/Archives/edgar/data/789019/000156459017014900/msft-20170630.xmlhttps://edgardashboard.xbrlcloud.com/flex/viewer/XBRLViewer.html#instance=http://www.sec.gov/Archives/edgar/data/789019/000156459017014900/msft-20170630.xmlhttps://www.sec.gov/Archives/edgar/data/789019/000156459017014900/0001564590-17-014900-index.htmhttps://www.sec.gov/Archives/edgar/data/789019/000156459017014900/0001564590-17-014900-index.htmhttp://xbrlsite.azurewebsites.net/2019/Library/MethodForImplementingStandardFinancialReportUsingXBRL.pdf

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Report Evaluation Overview The following is a comprehensive summary overview of automated validation processes performed by

two validation tools:

XBRL Cloud. A summary of and detailed results viewed online3:

Pesseract4 which is a locally installable software application (so we cannot provide a link to anything

online, you would have to install the tool):

3 View online, http://xbrlsite.azurewebsites.net/2017/Prototypes/Microsoft2017/evidence-

package/#ReportProperties.html 4 Pesseract is free to download and install, http://pesseract.azurewebsites.net

http://xbrlsite.azurewebsites.net/2017/Prototypes/Microsoft2017/evidence-package/#ReportProperties.htmlhttp://xbrlsite.azurewebsites.net/2017/Prototypes/Microsoft2017/evidence-package/#ReportProperties.htmlhttp://pesseract.azurewebsites.net/

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Summary of Exceptions XBRL Cloud reported XBRL US Data Quality Issues5

XBRL Cloud reported Reporting Entity Specific Rules issues6:

Roll forward:

Roll forward:

Roll forward:

Roll forward:

5 View XBRL US data quality issues online,

http://xbrlsite.azurewebsites.net/2017/Prototypes/Microsoft2017/evidence-package/#Validations-DQC_MANUAL.html 6 View reporting entity specific rules issues online,

http://xbrlsite.azurewebsites.net/2017/Prototypes/Microsoft2017/evidence-package/#Validations-ENTITY_RULES_MANUAL.html

http://xbrlsite.azurewebsites.net/2017/Prototypes/Microsoft2017/evidence-package/#Validations-DQC_MANUAL.htmlhttp://xbrlsite.azurewebsites.net/2017/Prototypes/Microsoft2017/evidence-package/#Validations-DQC_MANUAL.htmlhttp://xbrlsite.azurewebsites.net/2017/Prototypes/Microsoft2017/evidence-package/#Validations-ENTITY_RULES_MANUAL.htmlhttp://xbrlsite.azurewebsites.net/2017/Prototypes/Microsoft2017/evidence-package/#Validations-ENTITY_RULES_MANUAL.html

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XBRL Cloud reporting entity specific roll up rules inconsistencies7: (total of 20 inconsistencies, 17 of

which were not issues, the following three are possible issues)

Roll up:

Roll up:

Roll up:

XBRL Cloud Disclosure Mechanics and Reporting Checklist8:

7 View reporting entity specific roll up inconsistencies online at,

http://xbrlsite.azurewebsites.net/2017/Prototypes/Microsoft2017/evidence-package/#Validations-XBRL_CALCULATIONS_MANUAL.html

http://xbrlsite.azurewebsites.net/2017/Prototypes/Microsoft2017/evidence-package/#Validations-XBRL_CALCULATIONS_MANUAL.htmlhttp://xbrlsite.azurewebsites.net/2017/Prototypes/Microsoft2017/evidence-package/#Validations-XBRL_CALCULATIONS_MANUAL.html

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Inconsistencies are that (a) no nature of operations disclosure (which is a required disclosure) was found

and (b) a Level 4 disclosure was provided for restructuring charges but no Level 3 Disclosure Text Block

was found.

8 View disclosure mechanics and reporting checklist online at,

http://xbrlsite.azurewebsites.net/2017/Prototypes/Microsoft2017/Disclosure%20Mechanics%20and%20Reporting%20Checklist.html

http://xbrlsite.azurewebsites.net/2017/Prototypes/Microsoft2017/Disclosure%20Mechanics%20and%20Reporting%20Checklist.htmlhttp://xbrlsite.azurewebsites.net/2017/Prototypes/Microsoft2017/Disclosure%20Mechanics%20and%20Reporting%20Checklist.html

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All of the other 68 disclosure that were tested where consistent with expectations. Note that not all

disclosures are tested, only the 68 common disclosures for which machine-readable rule have been

created.

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Fundamental accounting concept relations continuity cross checks for

current financial report The following results were obtained from running a standard algorithm using standard rules to test the

high-level financial accounting concept relations of information represented within the report.

Microsoft report using

The reporting styles of the primary financial statements of public companies fall into patterns9. This

Microsoft report follows the pattern COMID-BSC-CF1-ISS-IEMIB-OILY-SPEC6 which is used by

approximately 1,748 or approximately 31% of all public companies and 1,647 public companies are

shown to be consistent with all of these rules10. This reporting style includes:

A classified balance sheet.

An income statement that does report gross profit and does report operating income (loss).

The most common cash flow statement format is used.

The most common statement of comprehensive income format is used.

There are 21 relationships that are expected to exist and this Microsoft report is consistent with 100%

of those expected high-level financial accounting relationships.

Pesseract results: (summary of rules)

9 US GAAP Reporting Styles, http://www.xbrlsite.com/2018/10K/US-GAAP-Reporting-Styles.pdf

10 COMID-BSC-CF1-ISS-IEMIB-OILY-SPEC6,

http://xbrlsite.azurewebsites.net/2018/Campaign/Validation/ExtractionPrototype-SPEC6-2018-01-10_Revised.zip

http://www.xbrlsite.com/2018/10K/US-GAAP-Reporting-Styles.pdfhttp://xbrlsite.azurewebsites.net/2018/Campaign/Validation/ExtractionPrototype-SPEC6-2018-01-10_Revised.zip

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XBRL Cloud results: (showing only the income statement cross check results, all results can be viewed

online11)

Details of all the high-level financial accounting relations tested:

Balance sheet:

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View all results online at, http://xbrlsite.azurewebsites.net/2017/Prototypes/Microsoft2017/evidence-package/#Validations-USFAC.html

http://xbrlsite.azurewebsites.net/2017/Prototypes/Microsoft2017/evidence-package/#Validations-USFAC.htmlhttp://xbrlsite.azurewebsites.net/2017/Prototypes/Microsoft2017/evidence-package/#Validations-USFAC.html

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Income statement:

Net income breakdown:

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Reconciliation of net income attributable to parent to net income available to common shareholders:

Comprehensive income calculation:

Breakdown of comprehensive income: (parent, noncontrolling interest, total)

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Net cash flow:

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Net cash flow breakdown: (continuing and discontinued)

Breakdown of continuing and discontinued net cash flow:

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Comparison of fundamental accounting concept relations across all

filings of Microsoft (Summary) This compares the reports of Microsoft for each period for the past eight years. GREEN indicates

everything is consistent with expectation. YELLOW indicates that some issue exists.

Over the years, Microsoft had two inconsistencies with the fundamental accounting concept relations

continuity cross checks. In one period, there was a contradiction related to the concept “us-

gaap:OperatingExpenses” reported in a disclosure. On another occasion there was an issue with a

concept used to report other comprehensive income.

Very good.

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Period comparison for an entity (Details) The following comparison uses the same algorithm and rules that were used to test an individual report

to test Microsoft reports for the past five years. Fundamental accounting concept relations continuity

cross checks, between periods for a specific entity, here you have five consecutive periods of Microsoft

reports:

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These are the files used for the ENTITY COMPARISON:

http://www.sec.gov/Archives/edgar/data/789019/000156459017000654/msft-20161231.xml

http://www.sec.gov/Archives/edgar/data/789019/000119312516742796/msft-20160930.xml

http://www.sec.gov/Archives/edgar/data/789019/000119312516662209/msft-20160630.xml

http://www.sec.gov/Archives/edgar/data/789019/000119312516550254/msft-20160331.xml

http://www.sec.gov/Archives/edgar/data/789019/000119312516441821/msft-20151231.xml

Consistent with expectations.

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Peer comparison across entities with the same reporting style

(summary) The same software algorithm and rules that were used to test the individual Microsoft report and the

cross entity comparison of reports are now used to compare the Microsoft report to four of Microsoft’s

peers that used the same reporting style as Microsoft. Here you have Microsoft contrast to four other

public companies that report using the same reporting style:

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These are the files for the PEER COMPARISON (Below):

http://www.sec.gov/Archives/edgar/data/858877/000085887717000004/csco-20170128.xml

http://www.sec.gov/Archives/edgar/data/320193/000162828017000717/aapl-20161231.xml

http://www.sec.gov/Archives/edgar/data/789019/000156459017000654/msft-20161231.xml

http://www.sec.gov/Archives/edgar/data/880807/000162828017000901/amsc-20161231.xml

http://www.sec.gov/Archives/edgar/data/796343/000079634317000031/adbe-20161202.xml

Consistent with expectations.

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Model structure analysis The analysis below compares the XBRL presentation relations created with what is expected. XBRL

validation does not verify the correctness of these XBRL presentation relations, so this additional step is

necessary to make sure no representation errors exist.

The following is a summary of the pieces that make up the XBRL-based digital financial report: (provided

by XBRL Cloud12)

Inconsistencies would be shown by cells with an ORANGE (error) or YELLOW (warning) backgrounds

having a value other than 1. In this case, everything is as was expected.

Excellent.

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View this information online here, http://xbrlsite.azurewebsites.net/2017/Prototypes/Microsoft2017/evidence-package/#ReportProperties.html

http://xbrlsite.azurewebsites.net/2017/Prototypes/Microsoft2017/evidence-package/#ReportProperties.htmlhttp://xbrlsite.azurewebsites.net/2017/Prototypes/Microsoft2017/evidence-package/#ReportProperties.html

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Type/Class relations analysis The type/class relations analysis checks to make sure that there are no cases where there are conflicts in

the relations between concepts. There were not type/class relations issues found in the Microsoft

report.

Excellent.

Reporting checklist and disclosure mechanics rules analysis Certain disclosures are always required to be provided such as the basis of reporting, nature of

operations, and revenue recognition policy. Other disclosures are required if specific line items are

reported. The reporting checklist and disclosure mechanics rules check a number of the very common

disclosures to be sure required disclosures are reported and that the disclosures are represented

consistent with expectation.

XBRL Cloud13

The following inconsistencies were noted:

1. The nature of operations disclosure, which is required, was not found.

2. There was a Level 4 Disclosure Detail found for restructuring charges; however, there was no

Level 3 Disclosure Text Block for that disclosure which is expected.

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View the full reporting checklist and disclosure mechanics rules and validation results online here, http://xbrlsite.azurewebsites.net/2017/Prototypes/Microsoft2017/Disclosure%20Mechanics%20and%20Reporting%20Checklist.html

http://xbrlsite.azurewebsites.net/2017/Prototypes/Microsoft2017/Disclosure%20Mechanics%20and%20Reporting%20Checklist.htmlhttp://xbrlsite.azurewebsites.net/2017/Prototypes/Microsoft2017/Disclosure%20Mechanics%20and%20Reporting%20Checklist.html

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Disclosure mechanics relations analysis The disclosure mechanics relations rules check each disclosure using automated processes to make sure

that all XBRL-based disclosures are consistent with expectation. This includes things like:

For each Level 3 Disclosure Text Block, a Level 4 Disclosure Detail also exists.

Required concepts such as totals of a roll up exist as expected.

Etc.

Of 68 disclosures checked for structural and mechanical rules, all 68 were found to be consistent with

expected structures or the disclosure did not exist (shown in gray) in any form in the report.

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Other observations The following is a summary of other noteworthy observations:

Within the Microsoft report there were:

o 129 Networks

o 129 Components (Network + Table) which means Microsoft always uses [Table]s and

always puts only one [Table] within a Network

o 194 Fact Sets which means that there are about 1.5 Fact Sets per [Table]

o 2,519 facts were reported; that is an average of 12.9 facts per fact set.

The following table shows the count of each type of report element and the number of extension report

elements added for each category of report element14:

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View information about extensions online at, http://xbrlsite.azurewebsites.net/2017/Prototypes/Microsoft2017/evidence-package/#ReportElementsAdded.html

http://xbrlsite.azurewebsites.net/2017/Prototypes/Microsoft2017/evidence-package/#ReportElementsAdded.htmlhttp://xbrlsite.azurewebsites.net/2017/Prototypes/Microsoft2017/evidence-package/#ReportElementsAdded.html

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Analysis by other tools The following is information on other tools that are available which can be used to measure the quality

of an XBRL-based financial report:

XBRL Cloud Edgar Dashboard https://edgardashboard.xbrlcloud.com/edgar-dashboard/?cik=0000789019&filterString=0000789019

https://edgardashboard.xbrlcloud.com/edgar-dashboard/?cik=0000789019&filterString=0000789019

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XBRLogic

http://asreported.com/post/the-xbrl-files-28-743-reasons

http://asreported.com/post/the-xbrl-files-28-743-reasons