Digital Financial Reporting

A general purpose financial report is a high-fidelity, high-resolution, high-quality information exchange mechanism. The report is a compendium of complex logical information required by statutory requirements and regulatory rules plus whatever management of an economic entity wants to voluntarily disclose.  The report represents quantitative and qualitative information about the financial condition and financial performance of an economic entity.  There are a number of different financial reporting schemes: US GAAP, IFRS, IPSAS, GAS, FAS, etc.

Financial reports are not uniform.  Financial reports are not forms, they have variability.  This consciously allowed variability is an essential, characteristic trait of robust reporting schemes such as US GAAP, IFRS, and others.  This allowed variability contributes to the richness, high-fidelity, and high-resolution of reported financial information that is unique to an industry sector, a style of reporting, or an economic entity. This variability is a feature of such reporting schemes.  Different reporting styles, different subtotals used to aggregate details, and using some specific approach given a set of allowed alternatives are examples of variability. Variability does not mean "arbitrary" or "random". There are known identifiable patterns.

Rules are used to articulate allowed variability and "channel" creators of reports in the right direction and therefore control variability, keeping the variability within standard limits.  That keeps quality where it needs to be.  Rules enable things like preventing a user from using a concept meant to represent one thing from unintentionally being used to represent something different. Further, the discipline of describing something in a form a computer algorithm can understand also assists you in understanding the world better; weeding out flaws in your understanding, myths, and misconceptions about accounting and reporting standards.

Use case:

Two economic entities, A and B, each have information about their financial position and financial performance. They must communicate their information to an investor who is making investment decisions which will make use of the combined information so as to draw some conclusions. All three parties (economic entity A, economic entity B, investor) are using a common set of basic logical principles (facts, statements, deductive reasoning, inductive reasoning, etc.), common financial reporting standard concepts and relations (i.e. US GAAP, IFRS, IPSAS, etc.), and a common world view so they should be able to communicate this information fully, so that any inferences which, say, the investor draws from economic entity A's information should also be derivable by economic entity A itself using basic logical principles, common financial reporting standards (concepts and relations), and common world view; and vice versa; and similarly for the investor and economic entity B.

Principles:

1. A general purpose financial report is a high-fidelity, high-resolution, high-quality information exchange mechanism.
2. Prudence dictates that using information from a financial report should not be a guessing game.
3. All formats conveying information should convey the exact same meaning be that format paper, e-paper, or some machine readable format. 
4. Explicitly stated information from information bearers or reliably derived information is preferable to requiring information receivers to make assumptions.
5. Double entry accounting enables processes that allow for the detection of information errors and to distinguish errors  (unintentional) from fraud (intentional).  
6. Catastrophic logical failures are to be avoided at all cost as they cause systems to completely fail.

General Purpose Financial Report:

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A logical theory defines and describes things.  All of this can be described logically in a manner that is easy for a professional accountant to understand.  For example, consider the Logical Description of a Business Report.

Logic a set of principles that form a framework for correct reasoning. Logic is a process of deducing information correctly.  Logic is about the correct methods that can be used to prove a statement is true or false.  Logic tells us exactly what is meant.  Logic allows systems to be proven.

The principles of logic are topic-neutral, universal principles which are more general than say the single domain of biology, mathematics, accounting, economics, or other domain. Logic has to do with the meaning of concepts common to all domains and establishes general rules governing concepts.

Logic is the process of deducing information correctly; logic is not about deducing correct information. Understanding the distinction between correct logic and correct information is important because it is important to follow the consequences of an incorrect assumption. Ideally, we want both our logic to be correct and the facts we are applying the logic to, to be correct.  But the point here is that correct logic and correct information are two different things.  If our logic is correct, then anything we deduce from such information will also be correct.

Logic is also not the psychology of reasoning.  Again, logic tells us how we ought to reason if we want to reason correctly.  Whether people follow these rules is not our concern here.  The psychology of reasoning helps one understand the actual reasoning habits of people including reasoning mistakes. Again, our concern is getting the logic correct.

From the set of allowed laws and regulations, professional accountants can exercise their judgement as to which allowed alternatives from that set best conveys information.

Details about financial reports must be explained to brainless robots.  Once you define things you can ask questions.

The discipline of describing something in a form a computer algorithm can understand also assists you in understanding the world better; weeding out flaws in your understanding, myths and misconceptions.