Proofs and Refutations

The semantic web or an enterprise knowledge graph is a set of statements of logic with global context represented in machine-interpretable form that is also readable and understandable to humans (so that those statements can be verified) that are usable by intelligent software agents.  But before you use those statements of logic you want to know the statements are correct. That set of statement of logic forms a theory.  Ontological commitment or commitment to a theory specifies what set of statements you commit to. Keeping in mind that everything is miscellaneous, somehow work can get done. 

"Blind commitment to a theory is not an intellectual virtue: it is an intellectual crime."  That statement is attributed to Imre Lakatos.

Lakatos points out the importance of critical thinking and skepticism in intellectual pursuits such as coming up with a theory. He suggests that blindly adhering to a theory without questioning its validity or considering alternative perspectives is not a mark of intellectual rigor but rather a failure of intellectual responsibility.  Lakatos encourages an open-minded, evidence-based approach to understanding the world. Intellectual virtue lies in the willingness to question, adapt, and improve ideas.

Lakatos argued that science and knowledge progress through a process of conjectures and refutations. This means that theories and the ideas behind those theories should be constantly tested, challenged, and refined based on evidence and reasoning.

Imre Lakatos’ was focused mainly on mathematical proofs in his book, Proofs and Refutations: The Logic of Mathematical Discovery; but his ideas are applicable broader than just math.

Observation, empirical evidence, and testing provided by literally thousands of financial reports submitted to the SEC and ESMA has led me to the following set of theories that describe and explain how financial statements work, their mechanics and dynamics:

  • Theory of Physical Format Independence: Financial logic is the same when represented using XBRL, RDF, labeled property graph (LPG), or logic programming.
  • Theory of Mathematical Integrity: Financial statements foot, cross cast, tick, and tie.
  • Theory of Model Structure: Report models are consistent, describable, and explainable.
  • Theory of Information Blocks: A financial report can be broken down into blocks of information.
  • Theory of Fundamental Accounting Concepts and Reporting Styles: There are different financial reporting styles which can be used and each has logical patterns of high-level financial statement line items (sub totals and totals).
  • Theory of Types and Parts: Financial statement pieces are identifiable and can be categorized in to distinguishable types and parts.
  • Theory of Disclosures and Disclosure Mechanics: Individual information blocks contained within a financial statement can be identified as being a specific financial disclosure.  Each specific financial disclosure can be described by a set of disclosure mechanics rules that explains the essence of that disclosure.
  • Theory of Reportability: What must be provided within a financial statement is explainable.

Interestingly, I am seeing that those theories also apply to general business reports, not just financial statements.

Why does one create a theory or commit to someone else’s theory?  A theory is just a tool.  Personally, I take a pragmatic approach and look at the ability of a theory to solve a problem or guide one’s actions.

Those eight theories that are behind the Seattle Method is only the beginning.  Here are additional theories:

Additional Information: 

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