XBRL-based Digital Financial Reporting

You learned much of what you need to know about semantic web fundamentals in fifth grade. Remember the class that covered grammar; specifically subjects, objects, and predicates ?  A sentence conveys a complete thought.  Every complete thought has a subject, an object, and a predicate which connects a verb with the object.  Subjects and objects are both nouns. To provide a quick refresher and to constrain what we are doing a bit.  Sentences can be declarative (making a statement), interrogative (asking a question), imperative (giving a command), or exclamatory (expressing strong emotion). First, we are less interested in all sentences, we are mainly interested in one category of the sentence called the "statement". (We are not interested in sentences that are "questions" like, "What is your name?" and we are not interested in sentences called "commands" like "Stop!". Are focus will be the statement .  A statement asserts or declares som...

There are now three converging logical conceptualizations of business information: XBRL International's Open Information Model (OIM) The Seattle Method which is based on XBRL and focused on achieving very high quality financial report information Object Management Group's (OMG) Standard Business Report Model (SBRM) which provides a logical conceptualization of a business report in RDF/OWL/SHACL. XBRL has been around since 2000 but never defined the business report model particularly well.  I tried to get such a logical conceptualization documented since about 2008.  I created my first logical conceptualization of a financial report, a specialization of the more general business report starting, in about 2012 which evolved to what I now call my Seattle Method.  OMG came up with the idea of the Standard Business Report Model (SBRM) in about December 2018 at a Financial Information Business Ontology (FIBO) meeting where I did a presentation on XBRL. OMG describes SBRM su...

Precision machines need to be calibrated.  Accuracy and precision are not the same thing. Per Wikipedia, Accuracy  is how close a given set of measurements (observations or readings) are to their true value. Precision is how close the measurements (observations or readings) are to each other. Accuracy is measured using a series of specific tests under controlled conditions to determine if a specific machine is operating within expected tolerances. Tolerance is an allowed amount of variation from a specified quantity.  Tolerances are set and serve as a standard between which results must fall.  There are many tests that can help determine the accuracy of a machine; remember that accuracy is not a standalone value, but rather the summation of these specifications. A financial report tells a story.  That story must be "true and fair".  Precision is the measure of how true and fair that story is to the real economic entity that the story is about. A finan...

Accountants have a dirty little secret.  It is called the " plug ".  There is another fancier term for the plug: "by induction".  The "plug" has big problems. In a properly functioning accounting system there would never be the need to "plug" numbers.  The process of "plugging" involves inserting or adjusting numbers (i.e. unsupported adjustment) to whatever is needed to make something work the way it should work. For example, if you had two systems that should always agree and for some reason they don't in fact agree; you have to adjust one of the two systems to make the balances of the two systems match. The practice of plugging is commonly used in the "eleventh hour" when you are trying to get a report out but something is not working and the "debits" are not agreeing with the "credits" or something is not adding up correctly and if you issued the report as is you would look a bit foolish because thi...

Data silos are not good. They cause lots of problems like inconsistencies between different silos, increased data management costs, difficulty in connecting data across siloes, difficulty in understanding and using data, and other such issues.  In the new era of artificial intelligence, bad data can be particularly problematic. Barc explains data governance thus: Data Governance includes the people, processes and technologies needed to manage and protect the company’s data assets in order to guarantee generally understandable, correct, complete, trustworthy, secure and discoverable corporate data. The topics encompassed by data governance are shown in the following graphic provided by Barc and include: Amazon Web Services (AWS) explains data governance thus: Data governance includes the processes and policies that ensure data is in the proper condition to support business initiatives and operations. Modern organizations collect data from various sources at scale to enhance oper...

Record to report is the process of recording financial transactions that eventually make their way to the financial report.  This blog post summarizes information related to recording transactions into an accounting system database prototype that I created in Microsoft Access, representing that transaction information using XBRL, summarizing the transaction information into what would go onto a financial report, and then generating that financial report in the global standard XBRL technical format. Here is all the raw material and results: Record  (This is the XBRL taxonomy that supports representing the transactions .) Record-to-Report  (This is the XBRL taxonomy that supports creation of the report .) BONUS : This is the same transaction information represented using XBRL Global Ledger. In this prototype to make things easer to represent, I focused on general journal transactions.  Subsidiary ledgers would work in a similar manner, there would just be significantl...