Digital Financial Reporting

This is a summary of information for testing of a base set of business rules which will be used to verify the appropriate representation of disclosures.  The task is to perfect the process of verifying disclosures to make it work appropriately.

The list below was selected from the complete list of disclosures. Ulitmately, business rules will be created for all of these disclosures and the list of disclosures will be tuned.

To articulate disclosure mechanical rules, XBRL definition arcroles are used. For more information see here. These arcrole definitions and functionallity will be perfected.

Starting point schema: http://www.xbrlsite.com/2015/fro/us-gaap/xbrl/Disclosures/BusinessRules/Disclosures_Base.xsd

Improved starting point schema: http://www.xbrlsite.com/2015/fro/us-gaap/xbrl/Disclosures/BusinessRules/Disclosures_BASE2.xsd (Human Readable HTML)

List of basic, fundamental disclosures: (the above schema contains all of these disclosures)

• Basis of reporting [Text Block] (HTML | XBRL | More Information)
• Nature of operations [Text Block] (HTML | XBRL | More Information)
• Revenue recognition [Text Block] (HTML | XBRL  | More Information)
• Significant accounting policies [Text Block] (HTML | XBRL  | More Information)
• Inventory components [Roll Up] (HTML | XBRL)
• Property, plant, and equipment components [Roll Up] (approach 1, using line items) (HTML | XBRL | More Information)
• Property, plant, and equipment components [Roll Up] (approach 2, using dimensions) (HTML | XBRL | More Information)
• Long-term debt maturities [Roll Up] (approach 1, this is a roll up) (HTML | XBRL | More Information)
• Long-term debt maturities [Hierarchy] (approach 2, this is a hierarchy as a total is not reported) (HTML | XBRL | More Information)
• Future minimum payments receivable of capital leases, lessor [Roll Up] (HTML | XBRL | More Information)
• Future minimum payments receivable, present value of net minimum payments under noncancelable capital leases, lessor [Roll Up] (HTML | XBRL)
• Future minimum payments due under operating leases of lessee [Roll Up] (HTML | XBRL | More Information)
• Future minimum payments receivable under operating leases of lessor [Roll Up] (HTML | XBRL)
• Deferred tax assets and liabilities [Roll Up] (HTML | XBRL | More Information)
• Product warranty accrual [Roll Forward] (HTML | XBRL)

To get the most out of this, it is extremely helpful to have the right perspective.  To get the right perspective, please read the Framework for Understanding Digital Financial Report Semantics.

A number of apprenticeships are offered to people to be directly involved in the process of perfecting this functionallity.  Please contact me for information.

Are you an expert of the past?  Or, do you anticipate the future?  Technology disruption is part of every day life these days. Disruption is good for small companies because it is small companies that generally innovates best.

Open innovation is essentially inter-company cooperation in research and development.  The term was promoted by Henry Chesbrough and is described in more detail as:

Open innovation is a paradigm that assumes that firms can and should use external ideas as well as internal ideas, and internal and external paths to market, as the firms look to advance their technology”.  Alternatively, it is "innovating with partners by sharing risk and sharing reward."  The boundaries between a firm and its environment have become more permeable; innovations can easily transfer inward and outward.

Open innovation is further explained in these videos:

• Open Innovation 02 - What is “open innovation"? (8 minutes)
• Three things I learned about disruptive innovation as an UberX driver, Ted Graham (10 minutes)
• TedTalk: Charles Leadbeater: The era of open innovation (20 minutes)

You want to be a disruptor.  Disruptive innovation changes markets. The reward is highest where the uncertaintly and risk is the highest.

Don't listen to the experts of the past.  If you want to disrupt the financial reporting market, here is informationthat will help you make sure you build the right products and solutions. Bolt-on solutions to existing inefficient processes is not innovation.  Digital financial reporting will cause a transformation.

In a prior blog post I mentioned a statement Barack Obama made in an interview with Wired magazine related to artificial intelligence. (yes, the president of the United States discussing artificial intelligence) The president made the following statement about self-driving cars:

"There are gonna be a bunch of choices that you have to make, the classic problem being: If the car is driving, you can swerve to avoid hitting a pedestrian, but then you might hit a wall and kill yourself. It's a moral decision, and who's setting up those rules?"

This statement which relates to self-driving cars points out two things that accounting professionals and other business professionals need to consider when thinking about XBRL-based digital financial reports:

1. WHO: who writes the rules, the logic, which software follows,
2. HOW: how do you write those rules and put them into machine-readable form and get all this to work reliably?

Think about that statement.  Who writes the rules that makes software go?  How, exactly, do you make the software work reliably, predictably, safely? 

Computers are machines.  In the past, machines were mechanical and worked using hardware.  Gears, levers, etc.  The gears, levers and other hardware were logically linked together.  Computers are really not that different from other machines except for one thing.  Software.

What software means is that you can adjust how the machine works dynamically by flipping bits.

But you still need to have logical and well reasoned software to flip those bits and get the computer application to work the way you want it to work.  If you have standard problem solving logic, such as ISO/IEC standard Common Logic, then software will be interoperable with other software.  No magic.  Deliberate, conscious, skillful execution is what makes this work. That is the HOW.

This is what problem solving logic is all about.  I explained my understanding of all this in a document, Comprehensive Introduction to the Notion of Problem Solving Logic for Professional Accountants.  Check the document out and learn a few skills that help you thrive in the digital age.

In a Wired article; Barack Obama, Neural Nets, Self-driving Cars, and the Future of the World; many important points were made relating to the capabilities and issues related to artificial intelligence (AI).  The article starts out with this statement:

IT'S HARD TO think of a single technology that will shape our world more in the next 50 years than artificial intelligence.

Here is a summary of important points made by the article:

• Generalized artificial intelligence vs Specialized artificial intelligence: A computer that can play chess is an example of specialized artificial intelligence.  An example of generalized artificial intelligence is where a computer can perform multiple tasks.  Specialized AI is not remotely as challenging to make work as generalized AI.
• Choices, Who creates the rules:  This statement was made regarding driverless cars, "There are gonna be a bunch of choices that you have to make, the classic problem being: If the car is driving, you can swerve to avoid hitting a pedestrian, but then you might hit a wall and kill yourself. It's a moral decision, and who's setting up those rules?"  Think about that.  When you program a computer choices are made.  Who will make those choices?
• Reliability and predictability: This statement was made, "One of the challenges that we'll have to think about is, where and when is it appropriate for us to have things work exactly the way they're supposed to, without surprises?"  Reliability, predictability, repeatability are essential to harnessing the power of artificial intelligence.
• Role of government bureaucrats: This statement was made, "The last thing we want is a bunch of bureaucrats slowing us down as we chase the unicorn out there."  While the government can be very important to starting innovation, the government needs to understand when to get out of the way.
• AI eliminating jobs: This statement was made, "There are actually very high-level jobs, things like lawyers or auditors, that might disappear."  And, "You're also right that the jobs that are going be displaced by AI are not just low-skill service jobs; they might be high-skill jobs but ones that are repeatable and that computers can do."  AI will eliminate jobs.  Best to add value in ways that computers cannot add value.
• Technology gap between public and private sector: "There's a huge amount of work to drag the federal government and state governments and local governments into the 21st century. The gap between the talent in the federal government and the private sector is actually not wide at all. The technology gap, though, is massive."

The entire article is worth reading.