XBRL-based Digital Financial Reporting

The purpose of this blog post is to brainstorm the ideal minimally viable accounting information system which will eventually be reconciled to reality.  But initially we (a) minimize complexity and (b) using an approach of idealized design .  The system being constructed is an accounting information system . Fundamentally, the system works as follows: A reporting framework is specified.  It may seem odd to start with a reporting framework.  However, as The 7 Habits of Highly Effective People points out, "Begin with the end in mind."  The reporting framework must be complied with; that is one fundamental purpose of the system; compliance with regulation. This specifies the reporting requirements. A source documentation containing information is received which is effectively a business contract. The source documentation receipt spawns a business event . That business event is entered into an immutable ledger. The business event spawns a financial transaction . ...

The Theory of Documentation is a metatheory which is part of the Seattle Method and describes the information which is provided, traditionally in the form of a document, which is the source of a business event and commonly ultimately part of a financial transaction. The Theory of Documentation considers the standard Semantics of Business Vocabulary and Business Rules (SBVR) which specifies how to create vocabularies and rules for creating them and the OASIS standard and ISO/IEC standard Universal Business Language (UBL) which is a standard for creating business documents. First, it is important to understand the terms "documentation" and "document" as we are using these concepts.  Documentation is the information contained within a document which is the source of a business event .  A document, as we will define it here, is the set of all documentation that wears the "costume" of a document which memorializes the information related to a business even...

Most accountants have created what amounts to what I refer to as a "closing book". For a smaller financial statement, that closing book might be only one or maybe a handful of electronic spreadsheets. For a larger closing book, such as that of a Fortune 1000 company, as Gartner consultancy points out , it might be more than 800 electronic spreadsheets. And those spreadsheets have mistakes.  Consider the fact that 94% of business operational spreadsheets are known to have critical errors . This includes the spreadsheets in that closing book. Now, PWC says that they have been able to get artificial intelligence to accurately read  electronic spreadsheets about 74% of the time with hopes that they can get accuracy up to about maybe 87%. And because an accuracy rate of 87% is not sufficient for a compliance report; humans are going to close the gap between the perhaps 87% accuracy rate and the theoretical goal of 100% accuracy. While this is maybe a viable approach; is this the o...

The following is a set of digital financial statements.  Each of these financial statements was loaded from the XBRL-based financial statements submitted by each of these public companies to the United States Securities and Exchange Commission (SEC): Microsoft 10-K Apple 10-K Amazon 10-K Facebook 10-K Salesforce 10-K Alphabet 10-K Nvidia 10-K Each of these reports was loaded from the XBRL-based report that was submitted by the public company to the SEC.  The report can be broken down into structures: Network, Component, Hypercube, Block, and if provided the Disclosure . Viewing the report by disclosure is not functional in this basic viewer. This representation of prototype disclosure mechanics rules helps you understand what disclosure mechanics rules look like which enable disclosures to be detected and verified. I am not going to go into this, to dig into this yourself see the Theory of Disclosures and Disclosure Mechanics . Below are comparisons for two rather common disc...

I am trying to understand the relationship between the Universal Business Language (UBL, an ISO/IEC standard ) which defines the structure, content, and semantics of business documents which end up as business events ; the ISO/IEC standard Accounting and Economic Ontology  which includes REA for representing business events , Algorithmic Contract Types Unified Standards ( ACTUS , on path to become ISO/IEC standard) which is a global initiative to bring clarity, consistency, and precision to the way financial contracts (e.g. the business events of financial institutions but one side of those events related to enterprises served by those financial institutions ) are represented and analyzed; the FASB US GAAP Taxonomy and IFRS Accounting Taxonomy that enables aggregated information about business events to be reported to regulators, the Semantics of Business Vocabulary and Business Rules (SBVR, an OMG standard) which is an initiative and general tool or mechanism for representin...

The Universal Business Language (UBL) is an XML-based standard created and maintained by OASIS (Organization for the Advancement of Structured Information Standards) for electronic business documents. Think of it as a universal vocabulary for invoices, credit notes, purchase orders, and other commercial documents. In addition, ISO/IEC 19845:2015  (which is free to download) specifies the OASIS Universal Business Language (UBL version 2.1), which "defines a generic XML interchange format for business documents that can be restricted or extended to meet the requirements of particular industries".  Specifically, UBL provides the following three things: A suite of structured business objects and their associated semantics expressed as reusable data components and common business documents A library of XML schemas for reusable data components such as "Address", "Item", and "Payment", the common data elements of everyday business documents A set of X...