Reading List for Professional Accountants Trying to Understand Digital Financial Reporting

Thursday, October 23, 2014 at 07:28AM
Charlie in Becoming an XBRL Master Craftsman

XBRL International released a document, XBRL Taxonomy Guidance Document, which is a very good step in the right direction when it comes to building XBRL taxonomies. The focus is using the XBRL technical syntax correctly. That is only a portion what a taxonomy author needs to understand when they are representing information about a business domain in machine-readable form.

Over the years I have run across the following books which are extremely helpful in trying to understand digital financial reporting.  I strongly recommend that for anyone who wants to understand digital financial reporting well or who want to build rock-solid products/solutions to read the following books:

• Data and Reality, by  William Kent: (First and last chapter are best, entire book is useful) The primary message of the Data and Reality book is in the LAST CHAPTER, Chapter 9: Philosophy.  The rest of the book is EXCELLENT for anyone creating a taxonomy and it is good to understand, but what you don't want to do is get discouraged by the detail and then miss the primary point of the book.  It provides something useful.  The goal is NOT to have endless theoretical/philosophical debates about how things could be.  The goal is to create something that WORKS and is USEFUL.  A shared view of reality. That enable us to create a common enough shared reality to achieve some working purpose.  Actually SEEING it work (i.e. prototype) PROVES that it works, let you see and understand HOW it works, and help one see how to make it work even better. 
• Everything is Miscellaneous, by David Wenberger:  (Entire book is useful) This is very easy to read book that has two primary messages:  (1) Every classification system has problems.  The best thing to do is create a flexible enough classification system to let people classify things how THEY might want to classify them, usually in ways unanticipated by the creators of the classification system.  (2) The big thing is that it explains the POWER of metadata.  First order of order, second order of order, and third order of order.
• Models. Behaving. Badly., by Emanual Derman:  (First half of the book is useful) If you read the Financial Report Semantics and Dynamics Theory, you got most of what you need to understand from this book.  But the book is still worth reading.  It explains extremely well how it is generally one person who puts in a ton of work, figures something out, then expresses extremely complex stuff in terms of a very simple model and then thousands or millions of people can understand that otherwise complex phenomenon.
• Semantic Web for the Working Ontologist, by Dean Allenmang and Jim Hendler:  (First two chapters) This is an extremely technical book, but the first chapter (only 11 pages) explains the big picture of "smart applications".  It is awesome.  It also explains the difference between the power of a query language like SQL (relational database) and a graph pattern matching language (like XQuery).  Querying can be an order of magnitude more powerful if the information is organized correctly.  That is why picking the correct data storage format is important.

I would recommend reading the books in the order listed.  The investment in time to understand this information will avoid going down the wrong path.

Article originally appeared on XBRL-based structured digital financial reporting (http://xbrl.squarespace.com/).