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Fads, Misinformation, Trends, Politics, Arbitrary Preferences, and Standards

John F. Sowa's paper Fads and Fallacies about Logic made something very clear.

The challenge of getting XBRL-based structured data financial reports to work correctly for public companies is not a technical problem; rather it is an even more formidable challenge of fads, misinformation, trends, arbitrary preferences, politics, and standards.

This is what I learned:

  1. There is a communications chasm between business professionals and information technology professionals.  Business professionals need to cross that chasm by learning how computers work. Fear of technology is uncalled for. (Please read Comprehensive Introduction to Knowledge Engineering for Professional Accountants)
  2. Syntax does not matter, it is a technical detail.  Semantics matters to business professionals.  There are so many technical alternatives available, so many things that are not interoperable that should be interoperable, endless philosophical debates and theoretical arguments, and most are a waste of time and energy.  Being practical matters.
  3. Business professionals don't need to "learn to code" or even learn technology.  Software developers need to learn to build better software.  To get this, business professionals need to understand what software to ask for.
  4. Business professionals need to gain an understanding of logical principles.  Basic stuff like: there exists, every, and, or, if-then, not, true, and false.  Really, it is that simple.
  5. The hardest task of knowledge representation is to analyze knowledge about a domain and state it precisely in any language. This is not a technical problem, this is a domain problem. Only business professionals can describe a business domain.  Full stop.
  6. Any declarative notation could be treated as a version of logic: just specify it precisely.  XBRL definition relations can be a logic if used correctly.  So can XBRL Formula.  XBRL presentation relations not so much.
  7. The logic notations of the middle ages is better than the stuff mathematicians and computer scientists came up with. (see the diagram on page 2, that is logic)
  8. The tools that will be created for digital financial reporting will be very powerful.

This is John Sowa's summary of his article:

In summary, logic can be used with commercial systems by people who have no formal training in logic. The fads and fallacies that block such use are the disdain by logicians for readable notations, the fear of logic by nonlogicians, and the lack of any coherent policy for integrating all development tools. The logic-based languages of the Semantic Web are useful, but they are not integrated with the SQL language of relational databases, the UML diagrams for software design and development, or the legacy systems that will not disappear for many decades to come. A better integration is possible with tools based on logic at the core, diagrams and controlled NLs at the human interfaces, and compiler technology for mapping logic to both new and legacy software.

Digital is coming to financial reporting.  Accountants, who came up with the idea for XBRL, are leading the way.  Public company XBRL-based financial reporting to the SEC is showing the way and working out the details.  Standards will be perfected by the market. Per the Law of Standards, things will get simpler; the market will see to that.

Posted on Friday, September 23, 2016 at 08:52AM by Registered CommenterCharlie in | CommentsPost a Comment

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