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Essence of Accounting

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Accounting, the universal technology of accountability , is one of the most mature, enduring and robust information processing systems ever devised in human history. With over more than 7,000 years of incremental, iterative refinement; accounting has evolved into one of the most stable, resilient, and interoperable information systems ever developed.  The system includes accounting of business events related to financial transactions, the reporting of that financial information, assurance of that information in the form of an audit when deemed necessary, and analysis of that financial information. Accounting is grounded on a foundation of transparency, traceability , and internal quality control. Its core mechanisms, most notably double entry bookkeeping and financial statement articulation , create a system in which every recorded business event is cross checked, internally validated, and mathematically constrained . Boundaries are well established, context is well understood, an...
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Epistemic Risk

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Epistemology is the study of the nature and sources of knowledge. Epistemology is a layer which governs how we distinguish between raw inputs (data), structured meaning (information), and actionable knowledge. Imagine "data", "information", and "knowledge" in terms of building a house. Bricks, 2 by 4s, cement, rebar; that is the level of "data".  The raw materials used to build a house. "Unprocessed". Walls, doors,  windows,  roof, floor; that is the level of "information". Information is like the bricks, 2 by 4s, and cement arranged into the structures that make up the house. "Processed bricks,  2 by 4s, and cement." House, a structure made up of walls, doors, windows, roof, and floor that you can live in. The house is made of walls, doors, windows, a roof, and a floor which makes it something you might be able to live in. "Completed structure." Blueprints, inspection process, building code; that is the e...
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Reference Reporting Frameworks

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The following are a set of reference reporting frameworks (a.k.a. reporting schemes, knowledge regimes) which helps those interested in understanding how to create an industrial strength reporting scheme using the Seattle Method to do so. Included with each reporting framework is a reference report which tests the entire reporting framework and a number of reports which helps one understand the notion of reporting styles. Each of these reference reporting frameworks has been rigorously tested. Each acts as would be expected per seven different fully compliant XBRL processors and three software applications which support the Seattle Method. Each of these reference working proof of concepts uses "https" as opposed to "http" where possible or necessary. Note that #1 to #6 do not make use of XBRL explicit noncore dimensions, #7, #8, and #9 do make use of XBRL explicit noncore dimensions. Accounting Equation : Very tiny; an introduction. Also introduces specific things t...
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Governance

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Governance is about the framework for decision making and collaborative action which formally specifies how a group of stakeholders organizes themselves and makes decisions and otherwise collaborates within some specific system or context to get things done and/or to achieve some common goal or objective. Governance is the system of rules, roles, processes, and relationships that guide how the group of stakeholders operate. Governance is the meta‑layer that, at it's core, ensures: Accountability : Who is responsible. It establishes who decides what. Performance. Procedures : How are decisions made. It establishes protocols. Controls. Process. Authority : Who is allowed. It ensures people are following the rules. Permissions. Alignment : Are we following our defined purpose. It checks to determine whether the group is on track. Predictability. Safety. Transparency. Openness. Integrity. Effectiveness. Collaboration. Assurance : Are we doing what we said we would do. Auditability. Tr...
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Traceability

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Traceability is one of the most important aspects of the universal technology of accountability . Accounting is a designed system. Accounting has built in transparency and traceability mechanisms. That traceability is reversable meaning it works in both directions. In addition, accounting has built in quality control mechanisms such as double entry and articulation . This article on traceability explains the notions of "trace", "track", "walk", "drilldown", "provenance", "audit trail". Trace : Trace relates to following a complete path backwards from its current point to where it began. Track : Track relates to following an emerging path forward from a starting point to follow where it goes. Walk : The notion of "walk" is a step-by-step manual navigation through a system from a source to an origin or from an origin to it's source. Drilldown : Drilldown vertical movement through an aggregation; you start at a hi...
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Theory

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Semantics is the meaning behind the words we use. A theory defines the semantics of some system we use within an area of knowledge. A theory relates to some specific context and for some specific purpose.  A theory achieves this definition process using the formal language of logic . The elements of logic are used to provide definitions in the form of logical statements that form the theory. A theory provides semantic scaffolding, a common semantic foundation, essential infrastructure. A theory provides a deliberate, explicit, formal controlled vocabulary of terms which represent the important things (i.e. nature and structure) in a system, the organization (i.e. "is-a", "general-special")   of those things (i.e. primitive things and complex/compound things; concrete things and abstract things) within that specific system which includes the categorization or classification of things, a description of the schemas (i.e. "has-part", mereology ) of complex/...
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Reconciling Seattle Method, OIM, SBRM, XBRL

The purpose of this blog post is to reconcile the alignment of the Seattle Method , XBRL International's Open Information Model (OIM), and the Object Management Group's Standard Business Report Model (SBRM).  The Seattle Method, OIM, and SBRM are pretty much aligned because the Seattle Method is based on XBRL and OIM and the Seattle Method is also the basis for much of SBRM. The Seattle Method, OIM, and SBRM will then form an aligned formal global industry standards based  conceptualization of  a business report and the foundation upon which model-driven digital business reporting (including financial reporting) ecosystem will be built. First off, the Seattle Method, OIM, and SBRM should be grounded in some sort of upper level or top level ontology . This provides a rock solid foundation. Second, the objective is to create something like an " accounting oracle ", metadata for an ecosystem. That is the bigger picture. The following are a handful of key " thing...
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