Digital Financial Reporting

Mastering something is very hard work and you need to make sure you are mastering the right thing. It is an evolution, a progression. This graphic shows that evolution, that progression:

The Great Transmutation of financial accounting, reporting, auditing, and analysis is underway. The Evolution of a System provides a framework for understanding that change and my personal predictions.

If you want to master XBRL-based digital financial reporting, start here.  You don't need to read each of the 1,692 posts to my blog.  That was just a method for me to organize my brainstorming; my sensemaking activities.

But now my sensemaking activities are over and commercialization activities have begun. Maybe there will be a Universal Digital Financial Reporting Framework. That would be optimal in my view.  There are 10 key things that are necessary to create a proper framework: 

A financial reporting scheme represented digitally using an XBRL taxonomy which is then used to represent a report model for a report created by an economic entity in machine readable form serves multiple purposes: 

• Description: It is a clear and should be complete description of a report model (specification of what is permitted); created by standards setters or regulators or anyone else specifying a report.  And obviously the clear and complete description should represent accounting and reporting rules precisely and accurately.
• Construction: It is a guide to the creation of a report based on that permitted report model description whereby a human can be assisted by software applications utilizing that machine readable description of permitted report models.
• Verification: The actual report constructed can be verified against the clear, complete description assisted by software applications utilizing that machine readable description.
• Extraction: Information can be effectively extracted from machine readable reports and report models assisted by software utilizing that machine readable clear and complete description.

Machine readable knowledge graphs of financial reporting schemes and financial reports are the next step in the evolution of financial reporting.

The Seattle Method is an approach I created to making XBRL-based digital financial reporting work effectively.  Auditchain enhances the Seattle Method with the immutable digital distributed ledger "stuff" to take it to the next level, a possible candidate for a Universal Digital Financial Reporting Framework.  The business case for a digital version of a general purpose financial report and the case for enhanced transparency are crystal clear. Modern accounting approaches can, and will, ultimately prevail.

Here is a summary of the information that I have to help accountants and software engineers understand XBRL-based digital financial reporting: (You might want to start with this playlist which provides a video overview of digital general purpose financial report)

• Use case: Computational Professional Services
• Theory: Logical Theory Describing Financial Report
• Framework: Standard Business Report Model (SBRM)
• Method: Understanding Method (Abridged); Seattle Method
• Principles: XBRL-based Financial Reporting Principles
• XBRL: Essentials of XBRL-based Digital Financial Reporting
• Accounting: Essence of Accounting
• Reporting: Essence of Financial Reporting | Essence of Financial Reporting Metadata
• Financial report: Financial Report Knowledge Graphs
• Record to report: Effective Automation of Record to Report; Business Events
• Expert system: Expert System for Creating Financial Reports Explained in Simple Terms
• Logical Schema: Logical Schema of Financial Reports
• Repository: Good Practices Model for Implementing XBRL-based Reporting System
• Theory-driven Semantic-oriented Financial Report Creation

Examples Reports: 

• Here is the minimal set of examples that you need to study very carfully.  
• Here are a bunch of XBRL-based reports that can be helpful in your learning process.
• PROOF representations of US GAAP, IFRS, UK GAAP, and AU GAAP
• Showcase of Capabilities: Hello World!; Hello World using Dimensions; AASB 1060 Report; Billions; Trillions; Lorem Ipsum (Nonfinancial information); MINI Financial Report; PROOF Plus; Dimensions with Many Periods; Comparison of 300 Companies
• Interoperability: Many applications are available.

Golden versions: The very best examples of XBRL taxonomies and reports creatied using the Seattle Method; Standard Business Report Model (SBRM) or Conceptual Model (CM). (SUMMARY)

• Accounting Equation (XBRL Site, SBRM) (Impediments to properly functioning report)
• SFAC6 (XBRL Site, CM)
• SFAC8 (XBRL Site, CM) (Good practices information reposityr prototype)
• Common Elements (XBRL Site, CM)
• Common Elements Version 2 (XBRL Site, CM)
• Common Elements Version 3 (XBRL Site, CM) best version
• MINI (XBRL Site, CM)
• Proof (XBRL Site, CM) (Good practices information repository prototype)
• Essence (XBRL Site, CM)
• MINI with Business Events and Classic Transactions
• XASB (XBRL Site, CM)
• AASB 1060 (XBRL Site, CM)
• Primary Financial Statements for IFRS (Prototype)

These are the verification results from Pacioli verification on IPFS.

Here is a model good practices based XBRL-based reporting system. (Initial draft)

All this builds up to being able to create real financial reports using XBRL.  Here is a 10-K financial report created by Microsoft to which I added additional rules: Auditchain Pacioli | XBRL Cloud Evidence Package.

Eventually, all of the above will be summarized, synthasized, organized, and then be available within one resource, Mastering XBRL-based Digital Financial Reporting. That resource will likely be redone by a professional writer eventually.  You might want to check this resources page from time-to-time.

Software: Auditchain Suite; Pesseract; Luca (General)

Knowledge Portal Prototype (Here is the vision)

By the way.  XBRL is useful for both financial information and nonfinancial information.  See Lipsum example.

PLATINUM EXAMPLES: Simpler and improved versions of GOLDEN examples.