Posts

Fuzzy Logic

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Fuzzy logic  is a way of thinking that allows for degrees of truth rather than simply black-and-white answers like TRUE or FALSE when using Boolean logic (a.k.a. Boolean algebra ).  Fuzzy logic is an approach to handling the "shades of gray" type situations that exist where information might be incomplete, vague, or have some level of subjectivity. For example, in my subject matter of accountancy you have the notion of "audit risk".  The notion of audit risk is subjective.  Using fuzzy logic you can get a computer based system to provide useful information when it comes to working with information such as the notion of audit risk. With fuzzy logic you have a set of tools that enable software to interact appropriately with information in a known, understandable way.  Using fuzzy logic you can have things like: Fuzzy sets : Using normal set theory, membership in a set is black or white.  But with fuzzy sets you can have "degrees of membership" of a set. Lin...

Budget Working Proof of Concept Study Group

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This blog post summarizes information related to the creation of a budget using a model-driven approach.  Here is the fundamental information. The budget will be created using the MINI 2023 financial reporting scheme . Here is the first iteration of the budget, effectively a "template" which will be modified to create the budget: Monthly budget for first year Luca Suite Basic Viewer Inline XBRL Raw XBRL Report Model XBRL Formula (math rules) Five year annual budget Luca Suite Basic Viewer Inline XBRL Raw XBRL  (will load in Pesseract) Report Model XBRL Formulas (math rules) Download IMPORT Files and Report in Excel Video that walks you through initial budget template model Video that walks you through fact verification Video that walks you through editing of report model The budget can be created but the creator MUST NOT violate any of the rules.  Here are some of the rules that MUST NOT be violated: Fundamental accounting concepts  (i.e. you MUST have a balance sh...

Consequences of Starting at the End of the Chain

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Luca Pacioli (1445–1517) was a Renaissance polymath and a close friend of Leonardo da Vinci and widely regarded as the father of modern accounting.  What might his recordkeeping methods have looked like if Luca Pacioli had access to modern information technologies? In their article, Pacioli in the Computer Age: Back to the Future of Accounting and Risk , Willi Brammertz and Allan I. Mendelowitz point out the consequences of starting at the end of the chain when you implement accounting processes. While Brammertz and Mendelowitz focus on banks in their article, the same ideas are true for all businesses, large and small. Current accounting systems tend to focus on generating a balance sheet and an income statement, the debits and the credits.  By starting with the debit/credit problem first, entering financial transactions; when the  IT world computerized accounting they basically started at the "end of the chain" rather than at the beginning of the chain where they r...

YAML

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YAML  is yet another markup language or YAML ain't a markup language depending on which explanation you subscribe to. YAML is a markup syntax that targets the same use cases as XML and JSON.  XML (Extensible Markup Language), JSON (JavaScript Object Notation), Turtle (Terse RDF Triple Language), TOML (Toms Obvious Minimal Language), CSV (Comma Separated Values), TSV (Tab Separated Values) and other mechanisms for communicating data are all attempts to do very similar things in a way that is powerful yet easy for both humans and computers to read.  Each syntax has a basket of PROS and CONS. I had heard the term YAML before; but my interest was reignited by the mention by the Open Semantic Interchange (OSI) industry initiative is apparently going to use YAML. My "dream" is to have the capability to bidirectionally convert to/from any of the technical formats below.  Some conversions are one way, like to HTML or PDF. It appears to be the case that the technical f...

ISO/IEC 15944 - Accounting and Economic Ontology Implementation

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Double entry bookkeeping is a global open standard mathematical model. That standard model, which is part of the universal technology of accountability , was documented by Luca Pacioli in 1494 and is considered part of the language of business .   As I point out in the Essence of Accounting , bookkeeping and accounting are not the same thing.  Bookkeeping is a mechanical process of recording transactions. Bookkeeping is an action; it is a record keeping process. Accounting is about determining what constitutes the transactions that are then recorded per the bookkeeping process.  Accounting is the language used by bookkeeping. Accounting is a communications tool. Accounting is a classification system. Financial reporting schemes, like US GAAP and International Financial Reporting Standards (IFRS), specify those classifications among other things. Small proprietorships and  partnerships, medium size corporations, and large multinational corporations all  use ...

The Vision

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Imagine being able to replace the current "information bucket brigade" that is too manual because of excessive "friction" caused by  semantic fragmentation  and an " integration hairball " which effectively makes accounts have to fulfill the role of what amounts to a " data janitor "; and replace that sort of system (which seems to have become normalized in most people's thinking) with something that works better, faster, and cheaper.  Much of the drudgery of accountancy being reduced. When computers were first introduced in the 1950s to 1980s, what happened was that the manual bookkeeping and accounting practices and processes were observed and then implemented as computerized processes. The fundamental issue with that is that accounting "stuff" was implemented as a bunch of "strings" that were stored, eventually, in relational databases. Fast forward to 2012 and the notion of " things " rather than those "...

Conceptual Models as Social Artifacts

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A master craftsperson  is created and that creation process takes a significant amount of time, effort, and experimentation by a talented, skilled, experienced subject matter expert. Becoming a master craftsperson is a conscious investment. The authors of the paper, Conceptual modeling: Foundations, a historical perspective, and a vision for the future , refer to conceptual models social artifacts (page 11, section 4.3). Another paper refers to conceptual models as sociotechnical artifacts. Conceptual models are tools.  A conceptual framework is likewise a tool.  A conceptual framework is used to make distinctions, organize ideas, and guide thinking.  In accounting, US GAAP has a conceptual framework  and IFRS has a conceptual framework as well. A conceptual model tends to be very specific, defining elements and interactions between elements, computational, and if machine interpretable can be used for making predictions, providing explanations, and running ...