Keywords

1 Introduction

Ontology engineering methods, which have proven to cope with difficult standardization issues [5], are seldom used in developing standards of international financial reporting (IFRS). Consistency, completeness and clarity of recent editions of Conceptual Framework for FR [1] and reworked standards [2] by the International Accounting Standards Board (IASB) still need to be improved [12]. Additionally, we see the following deficiencies of this framework and standards:

  • absence of ontology engineering tools used for standard setting;

  • limited, inconsistent and not generalized conceptualization of economic contracts and their progression events [11];

  • repetitions and inconsistency among IFRS standards;

  • inconsistency with other enterprise standards and enterprise ontologies;

  • limited account for the impact of modern information technologies, such as data analytics and shared ledger [10].

The main contribution of this paper is the initial version of the Core Ontology of Financial Reporting Information Systems (COFRIS) grounded on the Unified Foundational Ontology (UFO) [5] network. Section 2 depicts an essential fragment of COFRIS presented in OntoUML [5] diagram in Fig. 1 and definitions of the main concepts and relations with references to the UFO patterns [3,4,5,6,7,8,9] and IASB conceptual framework [1] and IFRS standards [2] in Fig. 2.

2 COFRIS OntoUML Diagram, and Concept Definitions

Fig. 1.
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An OntoUML diagram of COFRIS economic agents (in yellow), relations (in beige), phases (in pink), and events (in blue). (Color figure online)

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Fig. 2.
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COFRIS terms and definitions with related UFO patterns and IFRS standards.

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3 Conclusions

Financial reporting standard setting, implementation and the corresponding information system development at present is a partially informal and long process and, as exemplified by other domains, may be improved using ontological conceptual modeling approaches. Existing foundational and core ontologies, as showed by UFO ontology network usage, provide upper level patterns for representing FR concepts and relationships.

Contract economic relationships as dispositions of economic exchange events, creating new or progressing existing contract lifecycle, is a fundamental and reuse facilitating pattern of capturing economic phenomena for FR. Based on this exchange pattern it is possible to extract patterns from particular standards to facilitate reuse. Ontological analysis allows for explication of the core contract phases and exchange types to capture full partition of the economic phenomena usable for FR. Introducing event reification per [9] should release income/expenses elements of FR from semantic overloading and unify FR concepts for performance statements and notes.

Aligning FR concepts with UFO allows for understanding the FR concepts meaning and classification in the enterprise domain, as for instance, the economic resource and asset definitions. Elaboration of correlative associations between enterprise and counterparty may lay a foundation for consensus based accounting in shared ledger environment.

Further, a full validation of COFRIS by modeling all IFRS standards is needed, including solving the ontology version transition problem.