Executive Summary

Thesis: Artificial intelligence has enabled accounting, reporting, audit, and analysis to be transformed.  In fact, artificial intelligence will drive this transformation because to maximize benefit from artificial intelligence the gaps in current accounting information systems need to be fixed. This will enable industrialization of many of the current craft-based work processes.  The Seattle Method provides a methodology. Accounting is a deterministic system. A ledger is a computational substrate. The notion of a holon and manifold provide massive leverage in creating the necessary software infrastructure. Humans and computers will work together as a team to perform work tasks.

The Seattle Method attempts to clarify, simplify, formalize, popularize, and systematize digital financial reporting which will potentially be used worldwide. The Seattle Method's contribution is in the codification of digital financial reporting; turning scattered ideas into a rigorous, elegant, teachable, repeatable methodology which can be reliably used to create industrial processes. This can result in industry norms for digital financial reporting using the XBRL global open industry standard.

The Seattle Method is a proven, rigorously tested, pragmatic, global open industry standards based framework, structure, and process for producing high quality precise machine interpretable digital business reports. Accounting is a well understood knowledge system which is now undergoing a major transformation as digitization enables industrialization of reporting, auditing, and analysis. Model-driven digital accounting, reporting, auditing, and analysis artifacts are the next evolutionary step, a step that replaces ad hoc “craft” based processes which rely on individual skills, judgements, and memory into best practices based, standardized, scalable, repeatable, efficient industrial processes.  This can occur because digital machine interpretable business reports can be created using global open industry standards such as XBRL International’s Open Information Model (OIM) and the Object Management Group’s Standard Business Report Model (SBRM).

Think information Legos. Digital. Scalable. Industrial strength. Maintainable. Modular. Versatile. Global open industry standards based. Artificial intelligence enabled.  These digital information Legos (a.k.a. digital information organisms) can be used to replace key mission critical electronic spreadsheets with a scalable industrial strength alternative. These digital information blocks are systems which can replace those "craft" based electronic spreadsheets.

To industrialize something means to turn it into a routinized, repeatable, scalable, reliable process that can be done the same way every time. That includes:

  • Standardization: You define the steps clearly so the work is done the same way each time.
  • Repeatability: Anyone (or any machine) can follow the steps and get the same result.
  • Scale: You can do it not just once, but hundreds or thousands of times.
  • Efficiency: You remove unnecessary variation, waste, or improvisation.
  • Transfer from “craft” to “system”: Before industrialization work depends on individual skill, judgment, or memory. After industrialization work depends on a documented, controlled process.

A simple metaphor. If you cook a meal from memory, that’s craft. If you write a recipe that anyone can follow, that’s standardization. If you build a kitchen that can produce 500 identical meals a day, that’s industrialization.

Digital financial reporting is not about standardizing forms but about enabling controlled customization through well defined business report models. This controlled flexibility allows computers to reliably interpret meaning, enabling automation of tedious accounting tasks and freeing professionals to focus on higher value work. Business report logic can be expressed using multiple technical formats including Semantic Web technologies, labeled property graphs, or logic programming with each different approach preserving the underlying conceptual logical model. This interoperability allows knowledge to flow between systems, agents, and applications, forming a new medium for exchanging meaning in both financial and non financial reporting contexts.

The Seattle Method, OIM, and SBRM are a foundation for a new era of human–machine teaming. By enabling precise information exchange and reducing epistemic risk, it supports Lean Six Sigma–level improvements in accuracy and efficiency. Accounting, auditing, and analysis will shift from manual “data janitor” work toward augmented, collaborative processes where machines handle repetitive tasks and humans apply judgment. This transition requires a new mental model, a model suited to the logic of digital information exchange rather than analog-era assumptions and promises substantial productivity gains, higher quality, and more reliable decision making.

For more information, please see the Seattle Method Overview. Or, have a look at my garden.


A framework is the principles, philosophy, set of explicit rules which establish boundaries, and supporting systems that enable and justify the creation of structures. A structure defines something and provides the "tracks" or "path" a process must follow. The process is the sequence of actions or methodology necessary to achieve the goal by utilizing the structure within the rules of the framework.  You need all three: a framework to provide the approach and tools, the structures which are created, and the process to create the structures utilizing the framework. A structure is not a process.  A process is not a structure. All of this is governed to minimize epistemic risk.

Type theory enables formal verification.  A simple metaphor to cooking is that: proofs are like recipes, types are like dishes. Imagine: A type is a dish you want to make. A set of declarative rules is the recipe for that dish. A proposition is the name of the dish. A proof is the recipe that shows how to make it. If you can produce a recipe (declarative rules), the dish exists (the proposition is true). If no recipe exists, the dish is impossible (the proposition is false). A software engine enables this within the boundaries of a framework.

Until a theory which includes an ontology exists, nothing is repeatable and nothing is predictable because meaning has not been agreed to. There can be no discipline. You need a theory which includes an ontology and a methodology, a process.  A process with no ontological structure is ad hoc, fixed and dependent on the skills of the practitioner.  Quality is about producing end results (the output) that meets the requirements of and in alignment with as defined intentions of the customer.

Artificial intelligence needs a trusted machine interpretable knowledge infrastructure to be reliable, interoperable, and operational. The Seattle Method provides that knowledge infrastructure at scale.

Additional Information:


Comments

Post a Comment

Popular posts from this blog

Reference Reporting Frameworks

Image
A financial reporting framework is a purposeful arrangement of financial line items, totals, subtotals, aggregations, disaggregations, structures, metadata, categorization, classification, assertions, restrictions, constraints, other conditions, etc. A financial reporting framework represented in a digital format should not be semantically impoverished. Leaving information out, consciously or unconsciously, is not desirable. These reference reporting frameworks provide the minimum of what is necessary. They are modest yet not impoverished. A financial reporting framework provides the elements necessary for reporting organized by basic line item element, superordinate elements, and subordinate elements organized by type per the process of classification .  Financial reporting frameworks tend to start with the high level concepts of the basic accounting equation: assets, liabilities, equity; and then build out from that basic accounting equation. The following are a set of reference ...
Read more

Overview

Image
( Executive summary ) Innovation doesn’t arrive. Innovation evolves. Imagine it.  Freedom from drudgery. Freedom from the toil of tedious, repetitive, mundane, monotonous tasks. Far less time needs to be spent fulfilling the role of "data janitor".  Time spent "transaction chasing" is significantly reduced. Accounting is a well understood system which has evolved over many thousands of years. Accounting, reporting, auditing, and analysis is being digitized. This digitization will enable processes to be industrialized  and productivity boosts to be realized. If you are an accountant, auditor, or analyst it is time to update your tradecraft. This overview is an attempt to take the work that I have done to understand XBRL-based reports and back into a framework for explaining those reports, accounting and audit working papers, analysis models to accountants and software engineers building software for accountants.  I am now referring to this as model-driven reporting ...
Read more

Core Pattern

Image
The core idea of XBRL is global open industry standard for information exchange  that is machine-interpretable that is also interpretable by humans (i.e. one version of information, usable by both humans and machines). This is achieved using the notion of the " information block ". The meaning conveyed by that information block is expressed using the XBRL global open industry standard format. An information block is a structural insight of an XBRL-based report. An information block is an exploitable regularity. An information block is a logical pattern. Having one version of information that is readable by both a machine and a human means that a common shared cognitive understanding and mutual knowledge provided by the information block is usable by both machine and human. An information block is a holon . An information block is an organism . A digital information organism .  An information block is a semantic unit which is stable and structurally sound. An information block...
Read more