XBRL-based Digital Financial Reporting

Accountants have always had a model and forgot it . Every accountant already believes fiercely in invariants; but they just don't use that specific word. But they understand the idea. The whole pedagogy is this: you already know what should be true. Now say it out loud, in a form the machine can check. That is the tick mark becoming a test. That single move unlocks everything else. Once an assertion is a test, it can be run, rerun, and run at scale; which means it becomes subject to Lean, Six Sigma, TQM, Agile, the whole family of disciplines that turn one-off craft into reliable process. The point is not methodology fashion. The point is that tests are what make an accounting workflow industrial: repeatable, reviewable, improvable. The simplicity trap . A spreadsheet feels simpler than a model, and that is true. But that simplicity comes from the limited expressive power of the spreadsheet. A model can represent far more than a spreadsheet ever could . It carries information, str...

So I put together what I call The Accountability Framework . A reasonable question to ask is if there are any other similar accountability frameworks or similar related frameworks.  All this seems to fit into what is referred to as: Governance, Risk, Compliance (GRC). There seem to be several different organizations in this space and closely related spaces: COSO COSO   (Committee of Sponsoring Organizations) is dedicated to providing thought leadership through the development of comprehensive frameworks and guidance on enterprise risk management, internal control, and fraud deterrence designed to improve organizational performance and governance and to reduce the extent of fraud in organizations. COSO is a private-sector initiative jointly sponsored and funded by the following organizations: American Accounting Association (AAA) American Institute of CPAs (AICPA) Financial Executives International (FEI) The Institute of Management Accountants (IMA) The Institute of Internal Au...

Governance, reporting, audit, assurance, controls, compliance, and accounting all exist to answer the same question: Can an actor demonstrate, with sufficient evidence, that they have fulfilled the responsibilities entrusted to them? Governance exists to establish accountability, accounting exists to support accountability, reporting exists to communicate accountability, and audit exists to validate accountability. Accountability is the production, communication, and validation of accountable behavior. Trust is the output of accountability. Accountability is part of a virtuous cycle . A feedback loop.  A causal chain. A cybernetic loop . Big Picture Here is accountability described in a few different ways and relative to some other things. Start with this: Governance creates norms. Accountability binds norms to actors. Accounting captures evidence of behavior. Reporting communicates claims about behavior. Assurance tests those claims against evidence. Trust enables governance decis...

So, you have all your information in the form of a knowledge graph.  Now, you want to process all that information.  What is the best way to do that?  This blog post is information that I have collected related to that task. First, what exactly are you trying to achieve? Or another way of saying this; what are the constraints and what is your definition of "best"?  Here are my constraints: Expressive power : the more you can do the better. Safety : you want the solution you are using to always return an answer as opposed to the system  having a catastrophic failure such as getting into an infinite loop, not returning a discernable answer, or something like that; the safer the better. Speed : you want the information returned quickly; and the quicker the better. So those are the constraints for my definition of "best". Second, what exactly do I want expressed?  Well, the answer would be "everything".  But, that one big group is not really that useful....

Just as accounting has formal semantics (assets, liabilities, equity, comprehensive income, investment by owner, distribution to owner, revenues, expenses, gains, losses) and an algebra (assets = liabilities + equity; beginning equity + comprehensive income + investment by owners - distribution to owners); governance can be viewed as having its own semantics and algebra. This same perspective is emerging in fields such as policy-as-code, computational law, enterprise modeling, defensible compliance, and governance frameworks. Semantic Model of Governance A semantic model identifies the fundamental concepts of a domain and the meaning of those fundamental concepts. For governance, the core question is: How do rights, obligations, authority, and accountability exist, change, and interact within an enterprise? Rather than viewing governance as a collection of isolated rules, a semantic approach views governance as a structured state of affairs consisting of: Knowledge (what is known; tr...

Arguably, the electronic spreadsheet is one of the most flexible end-user information systems ever created. In many organizations, the electronic spreadsheet is not just a spreadsheet; it is a database, reporting engine, modeling platform, workflow tool, a planning application, a project management tool, a calculation engine, dashboard system, integration layer, and sometimes important critical aspects of an ERP system that the ERP system simply cannot itself handle well. Most organizations rely on spreadsheets for their most important operational activities, including budgeting, forecasting, financial reporting, reconciliations, and performance management. Yet these critical processes are often built on tools that were designed to be maximally flexible rather than operationally controlled. The electronic spreadsheet's greatest strength is its almost unlimited adaptability, but that same flexibility introduces risk when spreadsheets become systems of record upon which organizations...