Digital Financial Reporting

The following is information for a corporate financial reporting class. Learn about XBRL-based digital financial reports using the logical conceptualization of a financial report rather than technical artifacts.  Get ready for computational professional services.  Auditors need to understand how to audit information conveyed by XBRL-based reports. Quality matters.

1. Overview: Document that walks you through all of the items below step-by-step. Provides a narrative that you can follow to get the most out of this journey.
2. Logical Systems: A financial report is a logical system.  So what is a logical system?  Watch this video. BONUS POINTS: Watch this entire playlist which describes the financial report logical system.
3. Logical Conceptualization of Business Report: This explains the pieces and dynamics of a business report. BONUS: Have a look at the details of the logical conceptualization of a financial report.
4. Luca: Luca is a tool for creating XBRL-based financial reports using logical conceptualization of business report. You can download and install that tool here. (Alternatively, see the Microsoft Access database provided for each of the exercises.)
5. Pacioli: Pacioli is a tool for verifying XBRL-based financial reports per the logical conceptualization of a business report.
6. Accounting equation: (Rendering) This is about as simple as it gets; represent the accounting equation using XBRL.  Three terms, one structure, one rule, a handful of associations.  BONUS: Watch this video and this video.
7. Hello World! (Rendering) A Hello World! example is a simple example that helps you understand something.  This is a Hello World! example of one structure.
8. SFAC 6 - Elements of Financial Statements, Very Basic: (Rendering) FASB's SFAC 6 defines 10 elements of financial statements: assets, liabilities, equity, comprehensive income, investments by owners, distributions to owners, revenues, expenses, gains, losses.  Put that into an XBRL taxonomy. In this very basic example, we put those ten elements and the three structures that contain them into XBRL format.
9. SFAC 6 - Add Net Assets: (Rendering) Adding an additional structure to the SFAC 6 representation, we help you understand that different structures can be used to provide flexibility to create financial reports using different models.
10. SFAC 6 - Elements of Financial Statements, Adding Hypercubes: (Rendering) Continuing with the SFAC 6 example, we now add hypercubes to the model so that you can see what functionality they provide.  BONUS: Watch this video.
11. SFAC 6 PLUS: (Rendering) Again continuing with the SFAC 6 representation, we add more structures related to net assets, changes in net assets, and fund balance; all using hypercubes.  Helps you solidify your understand about how using different structures helps you deal with financial report variability.
12. Impediments to Properly Functioning Logical System: Financial reports need to be "true and fair" representations whether information is conveyed on paper or in electronic form.  Rewatch these three videos if you have not already watched them: Impediments 1, Impediments 2, Impediments 3. This helps you understand what can go wrong and how to avoid those things.
13. Common Elements of Financial Report: (Rendering) Builds on SFAC 6, showing the "four statement model" and how the four primary financial statements are interlinked and HOW to do this correctly using XBRL. Helps you understand articulation and how to represent these relations using XBRL correctly. BONUS: Watch this video about articulation.
14. Proof: (Rendering | Inline XBRL) This Proof takes everything you will ever run across in an XBRL-based financial report, puts all those things together and makes sure all the parts interact with each other correctly. BONUS: Watch this video. Check out the pixel perfect rendering.
15. Trial Balance: (Rendering) Starts to tie information in the accounting system with the information in a financial report.  This helps you understand the links.  BONUS: Record to report, accounting process automation.  Also, watch this video, Seeing XBRL Work.
16. Not for Profit XBRL Taxonomy and Report: (Rendering | Taxonomy) Uses proven best practices to create an untra-high quality example of a properly created XBRL taxonomy and XBRL-based digital financial reports. BONUS: Use Pesseract to view the above reports.
17. Microsoft: (Rendering) Microsoft's XBRL-based report is pretty good, but it is missing many, many rules that help verify and prove the XBRL-based report is properly functioning.  BONUS: See further analysis of the Microsoft report here where I added about 50 missing mathematical rules.  Additionally, see this analysis of other software companies including Apple, Amazon, Facebook, Google, and Salesforce.
18. Analysis: Ultimately, financial reports should be readable by automated machine-based processes.  Read this document Explore! and watch this video. BONUS: Fiddle around with the Explore! database and files.
19. Compare/Contrast: These documents provide comparisons that let the reader compare/contrast each of the different representations. Each document walks you through the build up showing that fundamentally, a financial report model is a set of structures, associations, terms, and rules.
    • Terms: Categories that terms fall into.
    • Associations: Associations express relations between terms.
    • Structures: Structures are how a financial report model is created.
    • Rules: Focus here is mathematical rules.
20. Testing software: Testing software interoperability and capabilities.
    • Pesseract
    • Pacioli
    • XBRL Cloud
    • XBRL Query

Ready to learn more?  Be sure to check out Mastering XBRL-based Digital Financial Reporting. You can also examine any report submitted to the SEC using the Edgar Dashboard.

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Other more complex examples: 

• Member aggregation of long-term debt instruments
• Tick, tie, crosscast, foot (roll ups with a member aggregation)
• State fact book

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A Matter of Principles: Future of Corporate Reporting

Microsoft has some interesting offerings that help you understand where XBRL-based financial reporting are going.  Rather than "programming", think "configuring".  See the following offerings that are currently available from Microsoft: 

• Microsoft Power Automate: Used to automate workflows.
• Microsoft Graph: API for interacting with data within Microsoft 365 applications using one consistent interface which is essentially a knowledge graph. (You can visualize all this using Microsoft Graph Explorer)
• Microsoft Lists: A way to add ad hoc information into the Microsoft Graph.
• Microsoft Power Apps: Rapidly build low-cost software applications.
• Microsoft AI Builder: A turn key solution used to add artificial intelligence functionality into your systems using point and click. (Here are different AI model types.)
• Microsoft Dynamics 365: Microsoft's cloud based accounting system or ERP system offering that is integrated within the 365 offering.
• Connectors: Library of connectors for integration of system components.

It is unlikely that Microsoft has a corner on this market.  Oracle, IBM, SAP, and others either already do or will have similar offerings.  Also, Intuit will very likely provide similar functionality for QuickBooks.

Certified Public Accountants will interact with these sorts of systems to get work done.  This is how computational professional services will be built out.

The Carnegie Mellon Center for Computational Thinking defines computational thinking as:

"Computational Thinking is the thought processes involved in formulating problems and their solutions so that the solutions are represented in a form that can be effectively carried out by an information-processing agent."

I have mentioned computational thinking in a prior blog post.  The notion of computational thinking has more relevance when you think about computational professional services.  Here are some ways to learn more: 

• Five minutes: This five minute video, Computational Thinking by JULES, provides an excellent overview of computational thinking.
• About an hour: This 40 minute video, Computational Thinking, provides a bit more depth.
• Couple of hours: Want even more? Here is a video play list, Computational Thinking, that contains 9 videos (including the two above).

If you already get what computational thinking is and why it is critically important, then you might want to check out this XBRL-based financial reporting jumpstart or  Mastering XBRL-based Digital Financial Reporting.

Logical Contracts has created an Logic Toolkit for XBRL-based Digital Financial Reporting that is being called by the codename "Pacioli" (after Luca Pacioli) currently.  Fundamentally, Pacioli is a digital business reporting platform (including financial reporting), it is not just the one report you see.  You can interact with the details of reports; see this demonstration of interacting with reports using the logical conceptualization of a business report provide by SBRM.  Alternatively, you can interact with the report information using XBRL, you can use this demonstration to do that.

This is a summary of my testing of Pacioli.

Pacioli is build using SWI Prolog. This includes an online interface called SWISH. (See SWI Prolog's features here.)

You can load pretty much any XBRL-based report on the internet from that page above.  A short 2 minute video is provided that walks you through the Pacioli web service.

If you want to try this Logic Toolkit for XBRL-based Digital Financial Reporting out; I would encourage you to use these sample XBRL instances FIRST because you can gradually use larger, and larger, and larger documents and see what is going on.  I would suggest: Accounting equation, SFAC 6, Common Elements, Proof, XASB, and Not for Profit.

You can also use the documents from this XBRL Conformance Suite which are on the smaller size.

You can also try these XBRL-based reports submitted to the SEC for Microsoft, all of these software companies, any reports on this Edgar Dashboard, these IFRS-based reports, or any of these US GAAP-based reports.  Other reports you can use include: 

• TB Financial Reporting Scheme
• MINI Financial Reporting Scheme
• Not-for-Profit Financial Reporting Scheme
• XASB Financial Reporting Scheme (older)
• Corporate Financial Reporting Exercises

Logical Contracts used Prolog to implement the Logic Toolkit for XBRL-based Digital Financial Reporting.  You can get more details on this webpage.

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Other demos:

Altering XBRL

PROOF

Analyzing a Report

HTML Interface Prototyping, Most Current Draft

Luca is very basic working proof of concept software application that can be used to create an XBRL-based financial report.  We are not sure how far we will take this.  It is being used to help a software engineer understand some important details.

Requirements

To run Luca, you need the following:

• Microsoft Windows 10.  
• Microsoft.Net Framework version 4.7.2. 
• Microsoft SQL Server Local DB.

After you have installed the above, you should download and install the most current version of Luca.

Download Luca

You can download incremental builds of Luca here: (be sure to uninstall prior versions of Luca before installing a newer version)

• Luca Version 2.3.0.0 (May 19, 2021) Stable; entering dimensions now works. (Note that with this version, you might need to go to "Tools, Create New DB" to create/update your database.)

Tutorials to help you understand Luca and Standard Business Report Model (SBRM)

The following tutorials will help you understand how to use Luca and the nature of the Standard Business Report (SBRM) model.  With the SBRM model, you work with the logic of a business report, not the XBRL technical syntax.  XBRL is generated from the SBRM model.  Luca is not intended to be the GUI for interacting with business reports or financial reports; it is intended only to help you understand the SBRM logical conceptulization of a business report.  These basic tutorials will help you understand that model step-by-step:

• Accounting equation
  • Tutorial Documentation for Accounting Equation
  • Terms entry form screenshot - Accounting Equation
  • Excel spreadsheet for copy/pasting information into Luca
  • All documentation
• Hello World example (very basic)
  • Very Basic XBRL Primer (You should focus on section 1.3)
  • Excel spreadsheet to copy/paste terms, structures, and associations
  • All documentation
• SFAC 6 - Elements of Financial Statements - Very Basic (no hypercubes)
  • Tutorial documentation for SFAC 6 Very Basic.
  • This version of the SFAC 6 Elements of Financial Statements does not use hypercubes or dimensions to keep this as simple as possible.
  • Excel spreadsheet with SFAC 6 terms, labels, structures, assocations, facts to copy/paste into Luca
  • All documentation
• SFAC 6 - Elements of Financial Statements - With Hypercubes
  • SFAC 6 - Elements of Financial Statements tutorial documentation
  • Excel spreadsheet with terms, labels, structures, and assocations to copy/paste into Luca
  • All documentation
• Common Elements of Financial Statement
  • Tutorial documentation for common elements representation
  • Excel spreadsheet with terms, labels, structures, and associations to copy/paste into Luca
  • All documentation
• Proof
  • Tutorial documentation for proof representation
  • Terms entry form screenshot - Proof
  • Excel spreadsheet with Proof terms, labels, structures, and assocations to copy/paste into Luca
  • All documentation
• MINI (not using hypercubes)
  • Excel spreadsheet with terms, labels, structures, associations, and facts to copy/paste into Luca.

The following is free and sometimes open source software that you can use to validate and view the XBRL-based reports that you created using Luca: 

• Arelle (free, open source, API available, fairly technical)
• UBmatrix XBRL Processing Engine (free, open source, API, fairly technical)
• Pesseract (free, easy to use and non-technical)

This is a prototype cloud-based version of Luca. (work in progress)

This is a Microsoft Access version of Luca that works.