Specific Deficiencies in Capabilities of Existing XBRL Formula Processors
Monday, September 26, 2016 at 03:36PM
Charlie in Becoming an XBRL Master Craftsman

In prior blog posts I mentioned semantic reasoners, inference engines, XBRL Formula processors, and other such logic processors (not completely sure what to call these things).

What I was trying to figure out was what sort of application is necessary to process the information contained in an XBRL-based financial report in order to perform sophisticated verification of the information provided in such a structured data document.  One example is accounting and reporting checklists.

One thing that I have figured out is that syntax is not important.  It is semantics that is relevant, particularly the expressiveness of the semantics and the safe implementation of the semantics.  Fads and arbitrary preferences confuse and confound people, making it hard to get a straight answer.

Well, this is what I have figured out.  First, I can articulate all the semantics that I can imagine using XBRL.  As such, it would make sense to use an XBRL Formula processor to process the XBRL instances and related XBRL taxonomy information (including metadata that one can add).

But, all of the XBRL-based business rules and other metadata that I have created to support the creation and sophisticated validation of XBRL-based financial reports of the style that are submitted by public companies to the SEC shows that the currently available commercial XBRL Formula processors (which sit on top of XBRL processors and XBRL Dimensions processors) have specific deficiencies.  Literally, all are deficient.

To overcome these deficiencies, the following capabilities MUST exist or need to be added to XBRL Formula Processors:

If you try and reconcile the pieces of XBRL with the components of an expert system, you can clearly see the specific deficiencies in the capabilities XBRL Formula processors (i.e. the above list).  Here is that reconciliation:

This functionally listed above is necessary to properly work with XBRL-based financial reports.  Please review the Law of Conservation of Complexity.  Financial reports simply cannot have errors and there is too much detail in a structured data-based report for humans to get right using only manually oriented human-based processes.  There are exactly two ways to achieve this functionality:

  1. Improve the capabilities of XBRL Formula processors as indicated above (i.e. add the listed capabilities to existing XBRL Formula processors).
  2. Enhance existing business rules engines to support XBRL

If you want to understand better what I am saying here, please read the document Comprehensive Introduction to Expert Systems for Professional Accountants.  If you want an even better understanding, have a look at the Framework for Understanding Digital Financial Report Mechanics.

If you have any feedback to improve what I am saying here, please let me know.  If you know of any other resources that explain this stuff better than I have, please make me aware of those resources.

Article originally appeared on Intelligent XBRL-based structured digital financial reporting using US GAAP and IFRS (http://xbrl.squarespace.com/).
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