XBRL-based Digital Financial Reporting

Luca Suite is a cloud-based product of Pacioli.ai that can be used to create XBRL-based report models and reports. This overview and getting started guide can help you understand and start using the application. To use the application press the "LAUNCH APP" button in the upper right hand corner of the web page.  I created and am making available some  Excel and JSON import files  that can be used for the exercises below or in general to help you get started using this software application.  If you are more ambitious, grab this partial set of my conformance suite . This getting started exercise uses one of several different approaches to getting information into a tool for constructing and viewing XBRL-based knowledge graphs . Luca Suite supports my Seattle Method for creating high-quality XBRL-based reports . If you are trying to figure out how to register or login, use this registration and login getting started guide to work through that . Summary of Getting St...

In 2009 I authored a blog post, XBRL Killer App: A Radically Tailorable Tool . In this blog post I would like to revisit that same notion. Back in 2009 I could only use my intuition and imagination to contemplate that such a "radically tailorable tool" is possible.  Now, I have more a more tangible understanding of exactly how such a radically tailorable tool might actually work. Models were invented for a reason.  Models can serve many purposes.  Below you see a visualization of a logical model that I defined for a financial report  and use in my  Seattle Method : (here is the same thing for a general business report ) Of course, that is a visualization that is understandable by a human, perhaps a business professional or information technology professional.  There are other more formal and detailed representations of such a model such as in an axiomatic theory , XBRL , in UML , RDF (prototype SBRM), and other such formats for representing information wit...

The YouTube video, Ontologies as Conceptualizations by Nicola Guarino , helps one understand the application of ontologies and ontology like things to control systems.  Applied ontology is the application of ontology for practical purposes. Per my understanding (i.e. paraphrasing from the video); applied ontology, or applied computational ontology, is an emerging interdisciplinary area which defines an ontology as an artifact that expresses the intended meaning of a vocabulary in a machine readable form.  The practical intention is to enable competent use of the vocabulary in real situations.  It defines primitive categories of things and nature and structure of those things within a domain of discourse. The purpose of an ontology, per applied ontology, is to increase understanding and clarity by making explicit and communicating people's assumptions about the nature and structure of a domain of discourse.  The objective is to help people understand each other. Ulti...

Over the next 25 years, many tasks and processes will be automated.  But be careful.  Don't repeat the same mistake that Tesla made; over automating. Tesla repeated the same mistakes made by General Motors in the 1980s and 1990s. Learn from the mistakes of others rather than repeating those same mistakes. In an ArsTechnnica article from 2018,  Experts say Tesla has repeated car industry mistakes from the 1980s , the following statement was made: "'A lot of the mistakes we're hearing about [at Tesla] are mistakes that were made in the rest of the industry in the 1980s and the 1990s,' says Sam Abuelsamid, an industry analyst at Navigant Research. He points to the experience of General Motors, which wasted billions of dollars in a largely fruitless effort to automate car production in the 1980s." Elon Musk even admitted to the over-automation in a tweet,   "Yes, excessive automation at Tesla was a mistake. To be precise, my mistake. Humans are underrated....

In another post I mentioned the Atomic Design Methodology .   The Atomic Design Methodology is a mental model that someone is promoting for the design of web pages, here is that . But I think that mental model goes beyond web pages. In fact, Brad Frost who is apparently the creator of the Atomic Design Methodology of web pages, also promotes Atomic Design more generally . But the most useful part of his book to me is chapter 2, Atomic Design Methodology. I think I am seeing something, I think that something is very important, and I think this “ties” XBRL, SBRM, and RDF together. Per the definitions of the Atomic Design Methodology of “atom”, “molecule” and “organism”;  Atoms are basic building blocks and make up all “matter” or “ things ”. RDF is at the “atomic” level and an RDF triple is an atom. Molecules are two or more atoms held together by a “bond” (i.e. rules are bonds).  XBRL is at the “molecular” level, NOT at the atomic level and XBRL “stuff” like element,...

Traditionally, XBRL has been used for regulatory reporting.  This article, Using XBRL and big data to improve decision-making , written by Yanchao Rao, Bing Leng, Xiuping Mu, Chao Li, Xiaofeng Hu, and John Turner and published by Financial Management magazine provides information about implementing a big-data-led transformation using XBRL at the China National Petroleum Corporation's Hubei Sales Company (the HSC). HSC took advantage of XBRL to integrate a cross-platform and heterogeneous systems to share and integrate enterprise data to support decision-making in areas including daily operations, market prediction, asset evaluation, cost control, investment, and risk identification.  The HSC operates 824 petrol stations and 13 oil depots. The HSC has 21 heterogeneous information systems with decentralised data storage and nonstandardised and inconsistent data which had hindered data integration.  The financial control system and the other 21 disparate infor...

Poka-Yoke is a Japanese term that means "mistake-proofing". The aim of Poka-Yoke is to reduce inadvertent actions taken by humans and therefore the number of defects when performing work. Poka-Yoke is a Lean Six Sigma technique. The graphic below shows an example of Poka-Yoke.  Note that in the top part of the graphic below the positive and negative terminals could be put into the positive and negative slots either correctly or incorrectly.  But in the bottom graphic below you can see that it would be impossible to insert the terminals into the slots due to the difference in size of the terminals and slots. That is an example of Poka-Yoke. Error prevention or error avoidance or mistake proofing techniques such as this help improve quality by improving processes which help eliminate mistakes. Industrial engineering makes use of this type of technique to improve industrial processes. Similarly, this sort of technique can be used within computer software applications to impro...

Sensemaking is the process of determining the deeper meaning or significance or essence of the collective experience for those within an area of knowledge.  My superpower seems to be sensemaking. My system of interest was the general purpose financial statement . That system of interest has now expanded to the entire "record-to-report" process from the general journal, to accounting working papers and schedules, audit working papers and schedules, and ultimately then the financial report.  Effectively this includes the " work ", improvements to that work process ,  and the final output which is that general purpose financial statement. This excludes, for the time being, subsidiary journals and ledgers. Here is a graphic of my system of interest from a couple of years back: ( click here for larger view ) Microsoft CEO Satya Nadella and Nvidia CEO Jensen Huang  a predicting a monumental shift in how work is performed. For what it is worth, I agree with them....

In his book Saving Capitalism , Robert Reich describes three categories that all modern work/jobs fit into: (Robert B. Reich, Saving Capitalism , Alfred A. Knopf, page 204-206) Routine production services which entails repetitive tasks, In-person services where you physically have to be there because human touch was essential to the tasks, Symbolic-analytic services which include problem solving, problem identification, and strategic thinking that go into the manipulation of symbols (data, words, oral and visual representations). In describing the third category, symbolic-analytic services, Mr. Reich elaborates: (emphasis is mine) “In essence this work is to rearrange abstract symbols using a variety of analytic and creative tools - mathematical algorithms, legal arguments, financial gimmicks, scientific principles, powerful words and phrases, visual patterns, psychological insights, and other techniques for solving conceptual puzzles .  Such manipulations improve efficiency-ac...

The CEOs of both Microsoft and Nvidia are pointing out that we are on the verge of a monumental shift, that there are new ways to perform "work". Basically, it is now very possible to insulate subject matter experts from the technology that they need to do their job without the subject matter experts needing to get their hands dirty with the technology. An example of this can be seen in this short video . (What is going on can be hard to grasp, effectively that software you see understands these theories .) Subject matter experts (SMEs) that understand an area of knowledge can now utilize technology that is readily available to them in a form that they can easily use that technology.  The technology will do what you tell the technology to do.  This capability will help subject matter experts automate their own work, amplify their productivity, make them more efficient, and improve the quality of their work output. In addition, we can infuse the computer-processable interpre...

Who are you betting on: humanity or artificial intelligence? Frankly, I am betting on humanity even though humanity is made up of humans and humans have flaws and sometimes do really dumb things. The way that I figure the future will unfold is that sometimes the AI will be in control, other times humans will be in control; but over all, humans need to maintain control .  A computer is a tool just like a gun is a tool. A gun can be used to bring home dinner.  You can shoot yourself in the foot. A gun can also be used to murder someone or even mass murder or war. A gun is a tool.  I don't want to get into the gun control debate but think about that as you think about artificial intelligence; AI is a tool.  The problem with AI is not the AI tool; it is humans applying the AI tool inappropriately. Tools change the way we think.  Tools extend your mind. Engelbart described "aggregate work capacity" and "augmented capabilities" and the human system being augmented by ...

Business professionals and others with liberal arts degrees that are not paying attention to what information technology people are doing with artificial intelligence are making a big, big mistake in my view. They are putting themselves at a very significant disadvantage. These two articles summarize a lot of information nicely.  This paper, Human-in-the-loop or AI-in-the-loop?  Automate or Collaborate? , is excellent. This graphic is from that paper: This podcast,  Yaakov Belch: Humans in the Loop? No. Humans in Control – Episode 17 , is an incredibly fascinating discussion about how to think about how LLMs work. Personally, it never really occurred to me that humans would not be in control.  Now I understand why some people are concerned with artificial intelligence destroying humanity.  It is not about artificial intelligence "taking over".  It is about humans doing something really dumb when trying to take advantage of what artificial intelligence provi...

I began my career in accounting in 1982 as an auditor with Price Waterhouse when accounting and audit working papers and schedules were 100% paper.  But within three months, I was creating many of those same working papers and schedules first in VisiCalc and then Lotus 1-2-3.  I would create those schedules and working papers electronically, then print them out, and tape them into the bundle of paper that supported our audits. The Compaq luggable computer was invented and electronic spreadsheets where even more compelling. Today, accounting and audit working papers tend to be 100% electronic proxies for those paper documents created in Excel or some other electronic spreadsheet, Word or some other word processing document, PDF generated from some word processing document, and maybe HTML.  All of these are presentation oriented proxies for documents and none of them is truly understandable by a computer based process. The next step in the evolution of accounting and audi...