XBRL-based Digital Financial Reporting

Why do we "post transactions to an accounting system"? Why can't the information from a business event be turned into a transaction information and the information then just end up in the right financial statement accounts? For probably 10 years, I have been trying to figure out how to get information into an accounting system correctly even if you are not a trained bookkeeper or accountant.  During that time I have run across several clues.  Those clues include: The Resource-Event-Agent (REA) model is an approach to conceptualizing the semantics of economic exchanges  and conversions such as accounting transactions or business events. REA is an ISO standard.  For more information about REA, please see this blog post . Algorithmic Contract Types Unified Standard ( ACTUS ) has the same idea that I have for financial contracts that I have for business events.  ACTUS uses the notion of machine readable smart contracts to represent financial contracts. The book The Joy of Acc

New accounting specific arcroles have recently been added to the XBRL International Link Role Registry that enables global standard semantics for representing XBRL-based information. The XBRL taxonomy schema that defines the arcroles which are used to represent the logic can be found here:  http://www.xbrl.org/lrr/arcrole/accounting-arcrole-2023-01-04.xsd  That new logic includes: instant-inflow : Indicates that the inflow duration concept adds to the balance of the instant concept. (used with roll forwards) instant-outflow : Indicates that the outflow duration concept reduces the balance of the instant concept. (used with roll forwards) instant-contra : Indicates that the target instant contra concept is an offset against the concept on the source instant end of the arc. instant-accrual : Indicates the relationship between an instant concept and a durational accrual concept representing the provision of expense or income against the instant concept (Typically an asset or liability) to

XBRL US and others are collaborating to built the  Annual Comprehensive Financial Report (ACFR) XBRL Taxonomy .  The ACFR XBRL taxonomy is intended to be used by state and local governmental entities which is part of the Financial Data Transparency Act . This ACFR XBRL Taxonomy is one of the better financial reporting related XBRL taxonomies that I have seen.  What is good about it is that they make excellent use of hypercubes, they use XBRL dimensions well, the modeling is rational, they are providing XBRL definition relations for accounting related information, and other such things. A good way to have a look at the ACFR XBRL Taxonomy is within free viewer that is provided .  Check it out, you can explore the entire XBRL Taxonomy. In addition to the ACFR XBRL Taxonomy, several sample reports are provided that are represented in Inline XBRL. I have created a tiny sample XBRL instance to test getting the basic connections to the XBRL Taxonomy. Eventually I will  be building that exa

Authors Dean Allemang and James Hendler say it well in their book Semantic Web for the Working Ontologist (page 1): “In the hands of someone with no knowledge, they can produce clumsy, ugly, barely functional output, but in the hands of a skilled craftsmen, they can produce works of utility, beauty, and durability. It is our aim in this book to describe the craft of building Semantic Web systems.” A brick wall is made of exactly two things: bricks, mortar. But a brick wall created by a master craftsman, or mason, and a brick wall created by a “weekend warrior” with no knowledge of masonry will be very different. Master craftsmen are created and that process takes time and effort. The term “mason” can be further broken down in to more detailed distinctions. In the Middle Ages, the terms rough masons, row masons, stone setters, layers and freemasons were used to signify differences in skills. Freemasons who were the most skilled were paid the best. Masons built our physical world. Knowl

The Data Coalition (now the Data Foundation) calls it Smart Regulation .  MIT refers to this as Algorithmic Business Thinking . Carnegie Mellon University refers to this as Computational Thinking . Harvard University refers to this as Regulation, the Internet Way . Vanderbilt University refers to this as Regulation 2.0 . Tim O’Reilly Founder and CEO O'Reilly Media Inc. calls it Algorithmic Regulation . Robert Kugel of Ventana Research calls it Digital Finance .  The government of Norway calls this Nordic Smart Government and Business .  I refer to it as  computational professional services . However you refer to it, big changes are in the works and coming your way .  Are you ready?  If not, you might want to check out this conference: The Regtech Data Summit 2023 will be held Tuesday, April 11, 2023 in Washington DC: For more information about the Financial Data Transparency Act: The Story of Our New Language Financial Data Transparency Act  Artificial Intelligence Risks and Algor

Allow me to introduce you to what I believe is the world's first standards based expert system for creating financial reports .  This expert system is not for creating "standardized" form type reports.  This  expert system is for creating "customized" financial reports such as those necessary when reporting per robust financial reporting schemes such as US GAAP and IFRS. This is not a "bolt on" solution like what many other software vendors seem to have created.  This is a paradigm shift.   This blog post explains the difference between standardized and customized approaches. This endeavor was achieved with the help of many, many other people over a period of about 20 years.  I was the "orchestra leader" and "project manager"; the guy that pulls all the necessary pieces together.   The ultimate result is Auditchain Pacioli which is a logic/reasoning/rules/insights engine (not sure what to call it really) which was built by Miguel

The traditional way of representing information for an area of knowledge such as financial accounting, reporting, auditing, and analysis is in a book.  For example, here is a representation of the 10 elements of financial statements from SFAC 6 from an intermediate accounting text book: Another way of representing this information is in the form of a graph. ( Click here to view image on web page ) The above is only one version of a graph.  One thing about machine readable information is that you can easily recast it in different ways.  Here is another graph of SFAC 6 elements of financial statements: ( Click here to view image on web page ) Here is one final version of SFAC 6 elements of financial statements; this time the global standard XBRL was used to represent the graph of knowledge and the machine readable XBRL was used to generate yet another variation that is human readable: ( Click here to view image on web page ) Things like SFAC 6 Elements of Financial Statement are metadat