XBRL-based Digital Financial Reporting

A "thing" is an identifiable logical artifact such as an entity, idea, concept, event, situation, state, or process that is important to a system which you are concerned with.  If you are not concerned with something, then that is "nothing" to your system of interest.  But if it is important to you, then it is a "thing". Ideally, every thing can be unambiguously distinguished from every other thing in a system you are concerned with or any other thing in another system your system interacts with. A system can be represented using a theory or model or conceptualization. Logic is a tool for describing a system . Logic systems are describable . When you are constructing a theory or model, a thing is something that is represented within that theory or model .  A thing is different than a token that is used to represent that thing in your theory/model.  Ontology-like things can be used to physically describe things in a form readable to machines such as comp...

In his article, A Theory of Types , Graham Berrisford discusses the difference between a "thing", an "instance", a "type", a "set", and a "token" and provides this graphic to differentiate those five different  notions:  In this blog post I want to point out one very specific notion that a lot of people seem to have a hard time getting their head around.  This idea relates to the difference between a " thing " and the " token " used to represent the thing such that computer software can perform work for humans. A "thing" is about the notion or concept or idea that you are trying to represent and model.  A "token" is the physical implementation of that thing using some sort of technical syntax that a computer software system can read. So, for example, in accounting, the accounting equation has three different ideas:  assets,  liabilities,  equity. If you look at the Wikipedia article referenced a...

Technology can change rather quickly.  But people tend to change their minds significantly more slowly.  Pacioli.ai  and Luca Suite , which is part of Pacioli.ai, are potentially and in my opinion, a significant milestone in accountancy.  In fact, it could be a gamechanger. Yesterday , it was announced that Pacioli.ai and Luca Suite were made available as production, commercially available software.  (As I understand it, this is a public soft launch.)  This software release might be interesting to you because both WHAT is being made available is unique, but also HOW it is being made available is unique. In terms of WHAT; Pacioli.ai is a PROLOG based validator of XBRL-based business and financial reports and Luca Suite is a model-based financial report and business report creation tool which can serialize a report as XBRL, Inline XBRL, HTML currently and other formats to follow. In terms of HOW; Pacioli.ai is a TRUE Web3 software application.  Pacio...

With this article I want to throw something at the wall and see if anything sticks. Let me know what you think. ( Image generated by Microsoft Copilot ) For probably the past 10 or 15 years I have been trying to describe something.  The description I am looking for, I would have thought, should already exist.  But, I have been unable to locate a description that is acceptable to me. What I have found is literally hundreds of potential descriptions most of which were too technical, too incomplete, too complicated to be right, combined different "concerns" or lack  focus, or had some other flaw or flaws. A natural system is a system that occurs naturally (i.e. no human involvement in the natural system).  A designed system is a system intentionally created by humans (i.e. does not otherwise exist in nature).  A logic system is a type of designed system. A designed system is engineered to meet particular set of needs and can be adjusted or redesigned. Here is my mo...

Trying to extract information from a repository of XBRL-based financial reports and compare the extracted information from information extracted from other reports can help one see and understand a fundamental aspect of what most people are getting wrong about such XBRL-based financial reports. I have been able to effectively extract information from both US GAAP and IFRS XBRL-based financial reports submitted to the U.S. Securities and Exchange Commission's EDGAR system. (See here and here for US GAAP information; see here for IFRS information) The fundamental issue with extracting and comparing information from XBRL-based reports is this: Financial statements created using US GAAP and IFRS are not, and should not be, forms.   Meaning, the designers of both US GAAP and IFRS intentionally provide flexibility within the prescribed financial reporting standards to reporting economic entities which allows those economic entities to (a) report using different report line items, (b...

There is way, way too much hype when it comes to technology.  Many years ago I learned something really important: never trust a software company when it comes to understanding what their software applications can do.  Much better to see it for yourself. This " XBRL thing " that I got involved with way back in 1999 has taken on a life of it's own.  One thing leads to another, then another, then another.  But here we are.  This is what I see: This whole "knowledge graph" thing and this "artificial intelligence" thing are really not two different things; they are two things that will work together.  Standards are absolutely critical.  Also factoring into this is the whole "blockchain" thing. For me, all of this equates to new ways of interacting with accounting information.  Modern accountancy is going to remove a lot of the grunt work from financial accounting, reporting, auditing, and analysis.  Modern spreadsheets will be a thing.  Mo...

One can better understand errors that can exist in XBRL-based reports by using a very basic reporting scheme prototype, the accounting equation . The document, XBRL: Understanding What can Go Wrong , explains the sorts of things that can be impediments to an XBRL-based report being a properly functioning system.  The document Testing_Impediments.pdf  shows how software can detect these errors. I also created an XBRL International Conformance Suite rig which can be used to run software through all these tests to see if the software reports the correct result. And finally, here are the individual files for all the tests: Accounting Equation - State 1 (Properly Functioning System) :  Human Readable  |  All Files  |  Conformance Suite  |  Full Validation Accounting Equation - State 2 (Incomplete Coverage by Rules) :  Human Readable  |  All Files  |  Conformance Suite  |  Full Validation Accounting Equation - St...

Suppose you wanted to butcher a cow.  Here are three ways to look at a cow.  To be clear; say you are a butcher and you want to butcher a cow into cuts of meat from the cow. The first approach is to look at the cow as one big thing and then butcher the cow. The disadvantage with this approach is that you cannot really identify and work with the parts of the cow in a standard way because no standard terminology has been defined which you could use to refer to the specific parts of a cow. The second approach to working with a cow is to have standardized the parts of a cow, here we are focused on the cuts of meat that come from a cow.  You could have also focused on the different organs of the cow, but we are focusing on something else.  So, say, when a butcher refers to "chuck" other butchers understand because of the standard name "chuck" which is assigned to a specific part of a cow. The third approach to working with a cow is to have the different terms for the par...

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 pro...

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 fi...

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 en...

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 tha...