David Wenberger's book Everything Is Miscellaneous points out two important things:
- That every classification scheme ever devised inherently reflects the biases of those that constructed the classification system.
- The role metadata plays in allowing you to create your own custom classification system so you can have the view of something that you want.
As we move from "atoms" to "bits", people drag along the rules which apply to atoms and try to apply those rules to solve problems in the world of bits. This, of course, does not work. Everything Is Miscellaneous has countless examples contrasting the physical organization of atoms (such as books in a book store) and the organization of books digitally (like Amazon.com).
Third Order of Order
There are three orders of order:
- First order of order. Putting books on shelves is an example the first order of order.
- Second order of order. Creating a list of books on the shelves you have is an example of second order of order. This can be done on paper or it can be done in a database.
- Third order of order. Adding even more information to information is an example of third order of order. Using the book example, classifying books by genre, best sellers, featured books, bargin books, books which one of your friends has read; basically there are countless ways to organize something.
So what does this have to do with the US GAAP Taxonomy? It should be built to allow others to reorganize it as they see fit. Now, don't jump to any conclusions here. I am not saying that the US GAAP Taxonomy is random and can be organized every which way and still be meaningful. There is key data points which will always be true, these are rules which define the information's financial integrity. Many of these "key data points" don't exist in the US GAAP Taxonomy today. These are just relations between pieces of the taxonomy which relate to financial reporting. Things like the balance sheet must balance.
Third order removes the limitations which people seem to assume exist when it comes to organizing information. Weinberger says this about the third order of order:
In fact, the third-order practices that make a company's existing assets more profitable, increase customer loyalty, and seriously reduce costs are the Trojan horse of the information age. As we all get used to them, third-order practices undermine some of our most deeply ingrained ways of thinking about the world and our knowledge of it.
The US GAAP Taxonomy was built by the accounting standards setter, the FASB. It was built by accountants. It is a consensus-based product. Not one SEC XBRL filer uses the US GAAP Taxonomy as is to file with the SEC. Every SEC reorganizes the US GAAP Taxonomy.
But the US GAAP Taxonomy is not built to be reorganized. The structure of the taxonomy is more like a book. Can the US GAAP Taxonomy be reorganized? Of course it can. But it is certainly not optimized to allow for reorganization and reorganization is not even mentioned in the design characteristics. As such, it will cost more and be harder to create and maintain these reorganizations.
So how do you make it easier to reorganize? Many smaller pieces which can be put together as needed is vastly easier for a computer to deal with than having one large piece and trying to break that piece apart. That is one example of what can be done. Another is communicating the metadata which exists in the taxonomy, for example the information modeling patterns employed. A third is to make the existing metadata real metadata, rather than burying it in the labels of the concepts. Another is to add more metadata.
As accountants, analyts, and others use the US GAAP taxonomy ways to make the taxonomy easier to reorganize will become apparent. Just keep the idea of the third order of order in the back of your mind.
And if you can, check out Everything is Miscellaneous. You can read an insightful review here. You can read the prologue here and read chapter one here. You can read multiple chapters here at Google books. You can buy it on Amazon.com here.