XBRL-based Digital Financial Reporting

We use a map to describe a territory.  The map is not the actual territory, but a map can be quite useful in navigating a territory. A model is similar to a map. A model is not the real world thing, but if created adequately the model can serve the needs of the stakeholders of some system of interest.   A model enables a community of stakeholders trying to achieve a specific goal or objective or a range of goals/objectives to agree on important details related to capturing meaning or representing a shared understanding of and knowledge in some system of interest. The model captures important information about the elements and relations of a system of interest.  The model provides information about the patterns within the system of interest.  Patterns are the orderly, regular behavior of the elements of the system of interest. The description of the elements and patterns provided by a model can be deemed true to the extent that they are empirically tested and proven that the logic descr

It was the Greek philosopher Aristotle (384-322 B.C.) that first came up with the idea of classifying plants and animals by type, essentially creating typology. Typology is the study of  types and their traits, or the systematic classification of the types of something according to their common characteristics.  (Important note; this is different than mereology which relates to parts and wholes which is a completely separate topic, "has-a" or "has-part" or "part-of" or "composition".) When it comes to describing type relations, there are many terms used to describe what amounts to the same or similar things.  XBRL uses the terms "general-special" relations.  UML uses the terms "generalization-specialization".   SKOS uses "broader-narrower".  The ESEF/ESMA created " wider-narrower ". The SEC tends to use the terms "wider-narrower".  Others use " is-a ".  Others use " type-sub

You can think of a knowledge graph basically as a database that has a bunch of special characteristics and capabilities. A financial report is a knowledge graph .  XBRL is a global standard for representing financial report knowledge graphs.  This is a screen shot of a visualization of a knowledge graph of a financial report represented using the XBRL global standard: This is likewise a knowledge graph of the same financial report shown above rendered in a different format for some different purpose: ( click here for a larger image ) This is yet another rendering of the knowledge graph of that exact same XBRL-based financial report by a different software application: (you can actually use the software application by clicking here ) And this is yet another rendering of the knowledge graph of, again, that exact same XBRL-based financial report knowledge graph: (you can use this software application online also ) Every one of the visualizations of the knowledge graphs of the financial r

To many observers, the XBRL standard seems sort of strange.  But there was actually a method to what might appear to be madness.   First, let me address the issue of "complexity". Some call XBRL complex.  Financial reporting using US GAAP and IFRS has complexities.  XBRL had to address the needs of US GAAP and IFRS and other such financial reporting schemes, which have complexities.  As such, there is a lot to the XBRL technical standard which must meet those complex use cases.  One of the primary areas of complexity is extensibility. Financial reports are not, and should not, be forms.  The Financial Accounting Standards Board (FASB) which publishes US GAAP and the International Accountings Standards Board (IASB) who is behind IFRS or International Financial Reporting Standards consciously provide specific flexibility to economic entities creating financial reports using these two financial reporting schemes.  The ability for an economic entity to modify their report model

If you go to Wikipedia and search on " financial statement "; you will see this example of a financial statement for Wachovia National Bank from 1906 : I took this rather basic, simple, straight forward example and represented it in XBRL using Pacioli.ai 's cloud based software application Luca Suite.  Here is the XBRL instance of that report.  Attached to that XBRL instance is the XBRL taxonomy schema and linkbases. There are several ways to have a look at what I created.  The first is a report viewer provided by Luca Suite, which you can see here . Another way to look at the report is using an Inline XBRL viewer. Here is an open source Inline XBRL viewer provided via Arelle which is supported by Luca . Another way to view the report is simply has an HTML page generated by Luca Suite.  Here is that HTML page . Verification can be performed on the report using Pacioli.  Here is the technical analysis provided by Pacioli which was saved on IPFS .  Using that technical ana

Think of the process used for creating a financial report.  Is there, perhaps, a way to improve that process?  Is there a completely new paradigm that could be used to create financial reports?  What I have found is that people tend to believe that the way they do something is the way they MUST do that thing.  As is said, "If it isn't broken, then don't fix it." Well, is the process of creating financial reports broken?  Is audit broken?  Is financial analysis broken?  Here is some information to consider: Problems caused by silos Problems caused by documents Problems caused by semantics Problems caused by spreadsheets I will look at each of those four bullet points in order. Problems caused by silos The first problem I see is the problem caused by silos. The problem is that information used to create financial reports, perform audits, perform financial analysis tends to be created by a number of different parties, the information tends to exist in its own little silo