Ontologies will power our future. The document, Demystifying the Role of Ontologies in XBRL-based Digital Financial Reporting, will help you understand what ontologies are, get a sense of how they work, and see the sorts of things you can accomplish with ontologies.
In simple terms, an ontology is logic represented as machine-readable metadata. The more metadata you have, the more you can make software applications do. It really is that straight forward.
Here are several examples that give you a sense of how ontologies can be useful for XBRL-based digital financial reporting:
- US GAAP Cross Reference: Imagine a "professional accountant knowledge portal" for each financial reporting scheme. Imagine machine-readable disclosure checklists (rather than human-readable memory joggers).
- US GAAP Financial Report Ontology (Prototype): Imagine a machine-readable resource that is also human-readable that organizes the knowledge used for accounting, reporting, auditing, and analysis of financial information.
- XBRL-based Financial Report: Walk through this self guided tour of an XBRL-based digital financial report and think of such reports as reconfigurable pivot tables (rather than inflexible documents).
- Logical Model of a Report: Contrast this logical model with how XBRL-based reports were explained to you. This set of details explains each of those pieces. Imagine a software application that can interact with all this machine-readable metadata.
- Expert System for Creating a Financial Report: Watch these videos that are an initial descrption of an expert system for creating financial reports. More is coming soon, so stay tuned and watch Pesseract come to life.
Using a war metaphor, strategy is about picking the right battles and tactics is about execution of each battle effectively. It might be time to reevaluate your strategy and tactics when it comes to XBRL-based digital financial reporting.
GAAP Codification: An Ontology Perspective
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