XBRL-based Digital Financial Reporting

This article by Nicolas Figay,  When Knowledge Graphs Fail, It's Not the Ontology — It's the Epistemology* , is spot on.  It is critically important for business professionals to understand the following notions. First, toward the end of the article, the following statement is made, " Completeness is not produced by reasoning — it must be declared or governed. " That statement is spot on. As I have tried to point out in  articles I have written , there needs to be a conscious matching between possible perturbances and control.  This is the Law of Requisite Variety . Full stop. Second, there is a difference between " data ", " information ", and " knowledge ".  Most people seemed to be mentally locked in the world of data.  But that is not where you want to be.  You want to be working with information because you can use information to create knowledge; data will not get you where you want to be. Third, I never could really get my head aro...

The Future of Accounting is a forthcoming book by Dave McComb and Cheryl Dunn.  This is worth checking out. "This book ushers in a sea change in the practice of accounting and the implementation of accounting systems. We are not tweaking the status quo. This book is the product of rethinking accounting from first principles. This is what accounting would look like if we designed it anew, based on what has been learned in information systems over the last 50 years." Additional Information : Seattle Method Overview Building a Mindful Machine for Accountancy Brainstorming a Collaborative Work System for Reporting and Audit Teams Rethinking Financial Reporting: the Model-driven Financial Statement Financial Statement and Audit Quality Understanding Model-driven Standards based Semantic-oriented AI-powered Financial Reporting Understanding Global Open Industry Standards Based Model-driven Semantic-oriented Artificial Intelligence Powered Accounting and Audit Working Papers Framew...

In my view, the currently employed work systems used by a reporting team to generate a financial statement and by an audit team to perform and audit of a financial statement that has been generated should be completely destroyed (i.e. use the approach of idealized design ) and reconstituted.  Alternatively, currently employed systems might be supplemented or augmented to include additional new capabilities.  These new capabilities would take the following form: A model-driven approach  similar to XBRL-based digital financial reports as opposed to the current document oriented approach to creating accounting and audit working papers and schedules Global open standards based rather than proprietary Semantic oriented " things " as contrast to strings Software allows for the creation of and enforcement of good and best practices and canonical templates and leveraging standard work approaches Open-core model  software shared by all accounting and audit firms (i.e. proprie...

Here is some information about the quality of financial statements submitted to the U.S. Securities and Exchange Commission (SEC) and the audits of those financial statements: Per the PCAOB (October 2025) , between 2005 and 2024; Big R financial restatements (restatement of material errors) occurred at a rate of around 3% per year. That is an average quality level of 97% which is a sigma level of between 3 and 4 . Per the PCAOB (April 2024) , for 2024 audit engagements of the top six global networks of audit firms (PWC, EY, Deloitte, KPMG, BDO, and Grant Thornton); there was one or more deficiencies discovered per PCAOB inspection engagements for 26% of the inspection engagements for those top six global networks of audit firms. Audit Analytics performed an analysis of restatements over a 21 year period . Financial restatements are a significant measure of financial reporting quality. This chart provides an overview or restatements between 2002 and 2021: Additional Information: Audit A...

“If I have seen further, it is by standing on the shoulders of giants.” Isaac Newton It’s rare to find someone who possesses the right blend of skill, experience, education, talent, demeanor, and grit; not only to become deeply curious about a problem, but to also pursue that problem with sustained effort and ultimately succeed in solving that problem. The Wright brothers did not just get up one day and then decide to fly. It took Orville and Wilbur Wright four years of experimentation and testing to successfully achieve controllable sustained flight.  Their breakthrough was the invention of the notion of "wing warping" and putting that together with a three-axis control mechanism which allowed an aircraft pilot to achieve full aerodynamic control over aircraft roll, yaw, and pitch to effectively steer the aircraft and maintain equilibrium. That basic breakthrough enabled aviation to take off.  And that breakthrough, discovered by the Wright brothers and their Wright Flyer , ...

I have updated the MINI Financial Reporting Scheme.  This is the NEW VERSION for 2025 . Changes which were made include: Deleting about 8 stray terms which software had missed (i.e. report elements existed, but they were not used in any presentation relations). (Done!) Create a pre-closing trial balance. (Done!) Fix transactions to handle subclassifications correctly (to do). Possibly add the concept "Dividends". (Done!) Possibly add "Current Portion of Long Term Debt" report line item (Done!). Add reference implementation using The World Online (TWO) sample company that has 22,000 general journal entries. Improve the type-subtype relations. Revise data types to the newest version of each data type. Add dummy documentation and dummy authoritative references. (Done!) Adjust the business events to leverage the DCA core events (in November, when the book comes out). Better sync with canonical accounting and audit working papers. New Chart of Accounts XBRL taxonomy . Cr...