You perhaps only have to look at one web page to see the opportunity. Here is that page:
The point of this blog post is to show a new modern approach to creating a financial reporting scheme. What changes? Lots of machine-readable information in the financial reporting scheme. Be it a general purpose financial statement or a special purpose financial statement or even an internal financial report creation process; machine-readable information can add value in many ways for creating or consuming reported financial information.
This is true whether the report itself is human-readable or machine-readable. Probably the most benefit is using the machine-readable rules to prove the financial reporting scheme is working as expected and to communicate more clearly (i.e. representing key aspects of financial reporting schemes in machine-readable ontology-like thing).
Every financial reporting scheme has five fundamental things in common.
First, at the foundation of every financial reporting scheme is the double-entry accounting model. Simply stated, that model is: DEBITS = CREDITS. It is a mathematical model. (If you don't understand this model, this video is helpful!)
Second, building on the double-entry accounting model is the accounting equation: Assets = Liabilities + Equity.
Third, every financial reporting scheme defines a core set of interrelated elements of a financial statement that are fundamentally grounded in some form of the accounting equation (i.e. it could be Assets - Liabilities = Equity). For example, the Financial Accounting Standards Board (FASB) defines these ten elements of a financial statement in SFAC 6; Assets, Liabilities, Equity, Comprehensive Income, Investments by Owners, Distributions to Owners, Revenues, Expenses, Gains, Losses. Then, additional elements are defined based on that core set.
Fourth, every financial reporting scheme has what is called "articulation". Articulation is the notion that the elements of a financial statement are interrelated and therefore depend on one another and so the four core statements; the balance sheet, the income statement, the changes in equity and the cash flow statement are all mathematically interrelated. (This is explained very methodically by the FASB in SFAC 6; see section "Interrelation of Elements—Articulation" on pages 21 - 22.)
Fifth, every financial report has inherent variability that is the result of explicitly allowing intermediate components of a financial report (i.e. subtotals) to be combined in appropriate but perhaps different ways depending on the needs of the reporting economic entity. (See paragraph 77 on page 47 of SFAC 6.)
Because of the inherent mathematics and logic of financial reporting schemes they lend themselves beautifully to computer-based processes. A financial report is a logical system. I have taken the time to both prove this idea and to perfect the idea by representing six different financial reporting schemes in machine-readable XBRL. Now, none of these is 100% complete, they are sophisticated enough working prototypes. But they definitely can be used to communicate the essence of the idea and they are robust enough to make certain that everything works. Here are the six best plus others in the works: (all XBRL is tested using four different XBRL processors)
Here are others in the works:
There are three other test cases worth mentioning because they can really help you get your head around XBRL-based digital financial reporting. The first is the accounting equation test case. This is really good because it helps you see the big picture even though the example is small. Expanding on the accounting equation slightly is the SFAC 6 test case. Expanding a little more is the common elements of a financial report of four statement test case. All of those small test cases are incrementally expanded and explained in this document that proces that all these work effectively and correctly. And this sophisticated example of an XBRL-based digital financial report ties everything together into a nice little bow.
All of the above is based on the forthcoming OMG Standard Business Report Model (SBRM).
Suffice it to say that all of this is based on methodical, rigorous, and thorough testing. Everything is based on proven best practices. Rather than repeating the mistakes of others, I learn from their mistakes and avoid them.
Why would I take the time to do all this? You won't get it unless you have the right background understanding. Once you understand that, and then you watch this PBS Front Line Video, In the Age of AI, you will undoubtedly understand.
Want to learn more? Download this free software application and look at the examples. Check out Intelligent XBRL-based Digital Financial Reprting. I will be improving that resource over the next year. Something missing that you need? Let me know and I will try and help you find it.