Standard Business Report Model:Principles

Principles Principles help you think about something thoroughly and consistently. Overcoming disagreements between stakeholders and even within groups of stakeholders is important. Agreement between stakeholder groups and within stakeholder groups contributes to harmony. Lack of agreement contributes to dissonance. Principles help in the communications process. A “stakeholder" is anyone that has a vested interest. Another term for stakeholder is "constituent". A "constituent" is a component part of something. Foundational to arriving at harmony is having a common conceptual framework including a set of consistent principles or assumptions or world view for thinking about the system. This “framework for agreeing” helps the communications process which increases harmony and decreases dissonance. This is about bringing the system into balance, consciously creating the appropriate equilibrium/balance. The following is a set of principles which professional accountants can use to understand their perceptions, positions, and risks when it comes to financial reports. None of these principles is technical, all should be easy to understand. Prudence dictates that using financial information from an XBRL-based digital financial report should not be a guessing game. Safe, reliable, predictable, automated reuse of report information by machine-based processes is preferable to creating a guessing game. Imagine numerous different software developers creating algorithms to use the information within a report. A near zero defect report is useful, a defective report is not useful. It is difficult, perhaps even impossible, for humans to create things that don’t have errors. But a conscious command of rigorous processes and standards of excellence can contribute to minimizing defects. But what is an acceptable defect rate? The objective is to strive for a defect rate of sigma level 6. Rules prevent anarchy. Anarchy is defined as "a situation of confusion and wild behavior in which the people in a country, group, organization, etc., are not controlled by rules or laws." Rules prevent anarchy. Rules guide, control, suggest, or influence behavior. Rules cause things to happen, prevent things from happening, or suggest that it might be a good idea if something did or did not happen. Rules help shape judgment, help make decisions, help evaluate, help shape behavior, and help reach conclusions. Rules arise from the best practices of knowledgeable professionals. A business rule is a rule that describes, defines, guides, controls, suggests, influences or otherwise constrains some aspect of knowledge or structure within some business problem domain. Don't make the mistake of thinking that rules are completely inflexible and that you cannot break rules. Sure, maybe there are some rules that can never be broken. Maybe there are some rules that you can break. It helps to think of breaking rules as penalties in a football game. The point is that the guidance, control, suggestions, and influence offered by rules is a choice of business professionals. The meaning of a business rule is separate from the level of enforcement someone might apply to the rule. The only way to achieve a meaningful exchange of information without dispute is with the prior existence of and agreement as to a standard set of technical syntax rules, business semantics rules, and workflow rules. Meaningful exchange relates to exchange without disputes as to precise meaning, it means unambiguous interpretation, it means resolving conflicts and inconsistencies. Explicitly stated information or reliably derived information is preferable to implicit information. The rules of logic are well developed and understood. Formal logic is used to precisely describe complex systems such as safety critical railway signaling, medical device functionality, and nuclear power systems, or our system of mathematics. Digital financial reports can be guaranteed to be defect free using automated processes to the extent that machine-readable business rules exist. Meaning can be exchange reliably only to the extent that business rules are provided. Those business rules can come in two forms: human-readable and machine-readable. It is only to the extent that machine-readable business rules are available to automated machine-based processes that those automated processes can guarantee an XBRL-based digital financial report to be defect free. Defect free is defined as the objectivize logical, mechanical, and mathematical relations between reported facts. Beyond those machine-readable business rules, manual processes are necessary to detect and correct defects. Computers have limited reasoning capacity. Computers are machines. Computers are good at performing repetitive tasks, over and over, reliably. Computers are not good at: intuition, creativity, innovation, improvisation, exploration, imagination, judgement, politics, law, unstructured problem solving, non-routine tasks, identifying and acquiring new relevant information, compassion. Machines should do things that machines are good at, humans should do things that humans are good at. Business rules should be created by knowledgeable business professionals, not information technology professionals. Article 9 of the Business Rules Manifesto states, that business rules are of, by, and for business people, not information technology people. Business rules should arise from knowledgeable business people. Business people should have tools available to help them formulate, validate, maintain, and otherwise manage rules. Business people should have tools available to help them verify business rules against each other for consistency. Catastrophic logical failures are to be avoided at all cost; they cause systems to completely fail. If a system can break or cease to operate for unknown reasons or at any time, the system is not predictable and therefore not reliable. Computer systems tend to be implemented using a safe subset of first-order logic because classical higher-order logics cannot be safely and reliably implemented in the form of software programs. An easy way to understand this is to think of an infinite loop. If a computer program gets into an infinite loop from which it cannot escape, the program ceases to function. While the maximum problem solving logic is desirable, that must be balanced on the side of safety, predictability, and reliability; erroring on the side of safety. Complexity cannot be removed from a system, but complexity can be moved. The Law of Conservation of Complexity states that every software application has an inherent amount of irreducible complexity. That complexity cannot be removed from the software application. However, complexity can be moved. The question is: Who will have to deal with the complexity? Will it be the application user, the application developer, or the platform developer which the application leverages? Poor choices mean hard to use software. Simplicity and simplistic are not the same thing. Simplistic entails dumbing down a problem in order to make the problem easier to solve. Simplistic ignores complexity in order to solve a problem which can get you into trouble. Simplistic is over-simplifying. Simplistic means that you have a naïve understanding of the world, you don't understand the complexities of the world. Removing or forgetting complicated things does not allow for the creation of a real world solution that actually works. Simple is something that is not complicated, that is easy to understand or do. Simple means “without complication”. An explanation of something can be consistent with the real world, consider all important subtleties and nuances, and still be simple, straight forward, and therefore easy to understand. Creating something that is complex is easy. Creating something that is simple is hard and requires more work. A kluge, a term from the engineering and computer science world, refers to something that is convoluted and messy but gets the job done.