BLOG:  Digital Financial Reporting

This is a blog for information relating to digital financial reporting.  This is my brain storming platform.  This is where I think out loud (i.e. publicly) about digital financial reporting. It is for innovators and early adopters who are ushering in a new era of digital financial reporting.

Much of the information contained in this blog is synthasized, summarized, condensed, better organized and articulated in my book XBRL for Dummies and in the chapters of Intelligent XBRL-based Digital Financial Reporting. If you have any questions, feel free to contact me.

Ventana Research: Welcome to the Age of Robotic Finance

Robert Kugel of Ventana Research wrote an excellent article, Welcome to the Age of Robotic Finance.  In addition, Mr. Kugel explains this in more detail in a very informative 35 minute webinar.

Ask yourself a question, "Where is all the machine-readable structure information going to come from that these applications and 'bots' will be using."

XBRL is an excellent candidate for describing information, transporting information, and verifying the quality of information.  XBRL is a technology that enables these other technologies.  Keep this in mind as you watch the video.  If you are finding it hard to get your head around what Mr. Kugel is saying, you may want to consider reading Closing the Skills Gap.

More ambitious?  Check out Intelligent XBRL-based Digital Financial Reporting.

Coupling the ideas of robotic finance and the ideas of "lean finance" and you really have something. Another term for the process improvement piece is lean six sigma.  Most people think of lean six sigma in the area of operations.  But the ideas are very useful for processes such as the process of creating a financial report.

Posted on Monday, March 19, 2018 at 04:44PM by Registered CommenterCharlie | Comments Off | EmailEmail | PrintPrint

LEI Improvements

I mentioned LEI (Legal Entity Identifiers) in a prior blog post.  Seems like the LEI folks have made some very significant improvements in their offerings.

First, they created an ontology.

Second, they already had the ability to search for legal entities (not sure if this changed).

Third, they have provided a bunch of data formats.  I counted 15 different data formats!  (See the EXPORT button on the left hand side)

Fourth, this is a really nice HOW TO USE page.

Here is an example using Microsoft:

I don't know how things are going in terms of getting relationships between legal entities entered into the LEI repository.  My personal wish list is that:

  • The FASB and IASB come up with a common description of the components of an entity and use those terms consistently within US GAAP and IFRS.
  • The SEC starts allowing or requiring LEIs in XBRL-based financial filings to the SEC.
  • The SEC starts requiring public companies to report exhibit 21, the schedule of subsidiaries, in machine readable form rather than in HTML. LEIs should be used to identify registrants and the subsidiaries of the registrant.
  • The IFRS and US GAAP XBRL taxonomies coordinate their XBRL dimensions or [Axis] for breaking down an entity into components such as "Business Segments" and "Geographic Area" and such.  Preferably, those dimensions would be defined by XBRL International or mapped from US GAAP to IFRS using XBRL definition relations such as "essence-alias".

This is a great step forward for Fintech and Regtech!

Posted on Friday, March 16, 2018 at 08:24AM by Registered CommenterCharlie in | CommentsPost a Comment | EmailEmail | PrintPrint

Workflow and the YED Graph Editor

As I have pointed out in the past, you need syntax rules, business domain semantics (or business logic) rules, and workflow or process rules to effectively exchange information.

Having figured out the syntax and business domain semantics pieces, I am not diving into workflow.

An excellent tool relating to workflow that I have discovered is the yED Graph Editor.  The reason the yED Graph Editor is so good is that (a) it is free, (b) it works on Windows and the Mac OS, and (c) it supports a couple of different standard workflow syntaxes.

Accountants are trained to understand workflow, document workflow, and read workflow documentation. However, accountants still tend to focus on human-readable workflow documentation and never really consider the idea of machine-readable workflow documentation.  This will change.

There are two workflows that I am focusing on currently.  The first is financial report creation workflow.  The second is accounting process workflow starting at the general ledger level.

More to come, so stay tuned.

Here is an online version of the yED Graph Editor.

Posted on Sunday, March 11, 2018 at 11:29AM by Registered CommenterCharlie | CommentsPost a Comment | EmailEmail | PrintPrint

State of Florida to Require Cities, Counties, and Special Districts to Report Using XBRL

The state of Florida is passing legislation that would require about 1,600 cities, counties, and special districts in that state to report using XBRL. Florida is likely to be the first of many states that ultimately leverage the functionality of XBRL to improve their reporting systems.

In the United States there are about 90,000 state and local governmental entities.

I don't understand the process in the state of Florida; but what I can say is that the bill passed the House, it passed the Senate unanimously, and it is likely to be signed into law by the governor.  I guess this will play out over the next several days or weeks.

Look at the legislation lines 319 to 350 (on the left hand side of the PDF). You can track the history of the legistlation here.

Reck and Snow paper:https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2474922 

 

Posted on Friday, March 9, 2018 at 07:12PM by Registered CommenterCharlie in | Comments Off | EmailEmail | PrintPrint

Accounting Process Automation Using XBRL

What technical syntax do you use to implement process automation? Roll-your-own proprietary syntax?  OK, so you define your syntax; what about specifying the semantics?  You could use the semantic web stack; but that is only a syntax and you still have to define your semantics.

What if there was a better way?  I used XBRL to implement accounting process automation and financial report creation automation.  Basically, I stole all the best ideas I could find and added a few pieces that no one else provided.

In the document Accounting Process Automation Using XBRL I point out that XBRL is a well-thought-out flexible global standard syntax for representing facts and describing relations between facts. XBRL can handle financial and non-financial facts. XBRL excels at handling complex sets of facts such as an entire financial report. But XBRL can also be used for smaller sets of facts, binding information together in a tidy package, bound together with the strong “steel wires” of business logic.

Check it out and let me know what you think.

Posted on Wednesday, February 28, 2018 at 01:53PM by Registered CommenterCharlie in , | CommentsPost a Comment | EmailEmail | PrintPrint