Posts

Showing posts from September, 2025

Conceptual Models as Social Artifacts

Image
A master craftsperson  is created and that creation process takes a significant amount of time, effort, and experimentation by a talented, skilled, experienced subject matter expert. Becoming a master craftsperson is a conscious investment. The authors of the paper, Conceptual modeling: Foundations, a historical perspective, and a vision for the future , refer to conceptual models social artifacts (page 11, section 4.3). Another paper refers to conceptual models as sociotechnical artifacts. Conceptual models are tools.  A conceptual framework is likewise a tool.  A conceptual framework is used to make distinctions, organize ideas, and guide thinking.  In accounting, US GAAP has a conceptual framework  and IFRS has a conceptual framework as well. A conceptual model tends to be very specific, defining elements and interactions between elements, computational, and if machine interpretable can be used for making predictions, providing explanations, and running ...

Carving Up Reality

Image
These two presentations by Giancarlo Guizzardi are incredibly helpful in upskilling your digital proficiency.   Philosophical Foundations for Ontology-Driven Conceptual Modeling (part 1) Philosophical Foundations for Ontology-Driven Conceptual Modeling (part 2) Guizzardi published a book, Ontological Foundations For Structural Conceptual Models .  The stated objective of the book/thesis was, "The main objective of this thesis is to contribute to the theory of Conceptual Modeling by proposing ontological foundations for structural conceptual models." On slide 47 of the first presentation, Guizzardi mentions " Carving up Reality ".  That is exactly what is done when you digitize something.  To digitize something effectively , you have to have a special set of skills PLUS you need talent, skills, and expertise in the area of knowledge or field that you are "carving up" to make digital.  This is part of digital proficiency . Personally, I am helping to digiti...

Events

Image
Building on the blog post Classic Transactions and Canonical Representations of Business Events  and  Describing Situation Semantics using Situation Theory . I have become aware of several people or groups which are trying to do what appears to be exactly the same thing. Bill McCarthy created Resources, Events, Attributes (REA) in the 1980s which has the notion of a "business event". REA appears to be an ISO standard of some sort. Willi Brammertz created Algorithmic Contract Types Unified Standards (ACTUS) which is for financial institutions, but the same idea. ACTUS has the notion of a "financial contract". Dave McComb and Cheryl Dunn created what they call Data Centric Accounting (DCA) .  DCA is somewhat based on REA; but DCA took the notion of a business even a step further and they identified core patterns of business events. Peter Frampton and Mark Robilliard who wrote The Joy of Accounting and came up with the notion of “classical transactions” which insta...

Transaction Chasing

Image
In another blog post, Problem with the Plug , I mentioned the notion of "transaction chasing".  Transaction chasing is what you have to do if you lose control of the information in your accounting system.  How do you lose control of the transactions in your accounting system? One cause is semantic fragmentation . If a piece of information that is used to "link" information together is missing, then a computer based process cannot effectively help you navigate within your accounting system because the "chain" of information has been broken. Accounting, reporting, auditing, and analysis is a process . Today, accountants are like data janitors . One rule of Lean Six Sigma is to do work as early as possible in a process.  But want accountants tend to do is not add all the necessary metadata, which causes the semantic fragmentation and breaks the linking chain, until (a) later or too late in a process and (b) added that information within some specific electron...

Accounting, the Language of Business

Image
Accounting is said to be the language of business. Accounting provides a standardized framework to communicate an economic entity's financial status or state at a particular point in time and also its financial performance between two points in time. Standardized accounting enables stakeholders that have some interest in an economic entity to communicate in a manner that allows these stakeholders to understand one another, enabling effective communication.  People often use the terms “bookkeeping” and “accounting” interchangeably .  But bookkeeping and accounting are two different things.  Here is the difference between bookkeeping and accounting: Bookkeeping is a mechanical process of recording transactions.  Bookkeeping is an action; it is a record keeping process. Accounting is about determining what constitutes the transactions that are then recorded per the bookkeeping process.  Accounting is the language used by bookkeeping. Accounting is a communicat...

The Kuhn Cycle

Image
The Kuhn Cycle , which was developed by Thomas Kuhn  and described in his 1962 book The Structure of Scientific Revolutions , explains how things change.  This resource, The Kuhn Cycle , provides an excellent explanation of how that cycle works. Paraphrasing from that resource: Systems evolve . Paradigms change. Mental maps for understanding something change.  Sometimes changes are incremental or sustaining; other times changes are disruptive which lead to paradigm shifts or paradigm changes. A " paradigm " is a comprehensive model of understanding that provides an area of knowledge or "field's" members with viewpoints and rules on how to look at the field's problems and how to solve those problems. Kuhn points out, "Paradigms gain their status because they are more successful than their competitors in solving a few problems that the group of practitioners has come to recognize as acute." That current paradigm is considered "normal" or ...

What is a Theory?

Image
Inspired by the article, What is a Knowledge Graph? ; I am writing this blog post to explain the difference between a graph , knowledge graph , an ontology , a schema , a theory , and a system . Network theory is part of graph theory .  A graph is a mathematical structure used to explain relationships between objects.  A graph, in formal graph theory jargon, is made up of vertices  and edges .  As I pointed out in Financial Report Knowledge Graphs  (section 1.4, page 10), the terms "vertices" and "edge" are very precise technical terms which have more common aliases including: Vertices (vertex) : Node, Point, Entity, Thing , Report Element Edge : Relationship, Line, Path, Association The terms "graph" and "network" are sometimes used interchangeably.  But to be precise, a graph is an abstract mathematical structure and a network is a real-world system instantiation of a graph.   A knowledge graph , is a graph (i.e. vertices and edges) that expla...

Universal Global Open Standard for Digital Accounting and Audit Working Papers

Image
Here is the vision.  What if there was a universal global open standard for digital accounting and audit working papers format. Think of it as "LEGO blocks for accounting, reporting, audit, and analysis".  An example of what I am talking about is available in what is provided by the HL7 FHIR Foundation . FHIR stands for Fast Healthcare Interoperability Resources . It’s a modern standard for exchanging healthcare information electronically. You can think of FHIR as the “semantic web for health records”. I learned from HL7 long ago that three things or "levels" of interoperability are NECESSARY for effective exchange of information.  Each layer is necessary but not sufficient on its own. True interoperability; particularly in complex domains like healthcare, finance, or enterprise systems;  *requires* all three working together in concert.  Those three levels of interoperability are: Syntactic interoperability which can be described as each system involved ...

Semantic Fragmentation

Image
Semantic fragmentation occurs when information that should be connected is not connected. It occurs when business professionals use inconsistent terms to describe the same thing, inconsistent descriptions of things , or connections which should be made have not been made, etc. Semantic fragmentation contributes to the integration hairball of most business enterprises large and small. Artificial intelligence will not work well in such an environment. Metadata helps to solve this semantic fragmentation problem. Semantic metadata helps to solve this problem even more.  It improves semantic hygiene . It solves the " data janitor " problem. It reduces the threat of inaccuracy . It provides unprecedented clarity . Metadata and semantic metadata work in the background.  But they supercharge software systems and will enable new ways of performing work . Metadata and semantic metadata enable new ways to interact with information. You can get richer answers to your questions faster....