Digital Financial Reporting

Personal finance is very disjointed and provides an excellent example of the power of something like XBRL to streamline processes.

First, you can think about a personal financial statement as somewhat of a "dashboard" into your personal finance. Your personal finance might include your checking accounts, savings accounts, credit cards, investments, your home, any student loans, your retirement plan, life insurance, family and estate planning, social security, and so on.  People such as Suze Orman and organizations like Charles Schwab and others can help you create a financial plan.  Basic accounting software like Quickbooks, Xero, and Wave among others can help you keep track of things. TurboTax and H&R Block and Taxly can help you file your tax returns.

There are different formats for personal financial statements.  The U.S. Small Business Administration has their personal financial statement form. Lots of different personal financial statement templates exist. Here is one, another, and another.

All of this tends to be very disjointed, few things "talk" to each other.  Why is that? A big part of this is that each software vendor or service provider wants to "own" the customer.  Another reason is the application centric mentality that software vendors tend to have. What if software were more data centric?

Google might be changing all this.  Apparently Google wants to be the "operating system of personal finance".  Apple seems to be after this also.

What if: (a) more standards where used, (b) better coordination existed, (c) metadata and models were defined to help things along this process, (d) artificial intelligence was used to make software smarter, (e) automated quality checks were built into processes where possible.

As I pointed out in my effective automation of the record to report process prototypes, there is a lot that can be automated.  If it can be, it likely will be.

If you want to get your head around the possibilities here, read Computational Professional Services.

What I am going to do is create an XBRL taxonomy for creating personal financial statements.  Stay tuned! (Here is the first installment of the XBRL taxonomy for personal financial statements.)

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Quickbooks Online Test Drive

Effective Automation of Record to Report Process (Iteration #4) is my fourth iteration of a prototype of automation of the record to report process.  This example is deliberately crafted to help you understand the process and see where improvements can be made. (Here are iterations 1, 2, and 3)

The significant benefit of this iteration include:

• I am using the Microsoft Dynamics accounting system database as the accounting system that is populated with The World Online (TWO) sample company data.
• Engine B Common Data Model (CDM) is used.
• Substantially improved version of my XBRL instance creator is being used.
• The documentation is substantially better.
• Everything you need to duplicate what I have created is provided.

To get a quick idea about what the prototype explains, flip through these slides.

Why is this useful information?  This information is useful because it help you understand modern approaches to accounting.  This can likewise work for streamlining personal finance. I essentially provide a complete implementation of accounting transactions flowing from the general ledger all the way to the financial report. Ultimately, more of these processes and tasks will be automated:

You actually don't need to use XBRL as I did.  But, using XBRL rather than some proprietary approach does have it's benefits.  Really any problem solving paradigm can be used.

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