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Electronic Spreadsheets and the Paradox of Flexibility

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Arguably, the electronic spreadsheet is one of the most flexible end-user information systems ever created. In many organizations, the electronic spreadsheet is not just a spreadsheet; it is a database, reporting engine, modeling platform, workflow tool, a planning application, a project management tool, a calculation engine, dashboard system, integration layer, and sometimes important critical aspects of an ERP system that the ERP system simply cannot itself handle well. Most organizations rely on spreadsheets for their most important operational activities, including budgeting, forecasting, financial reporting, reconciliations, and performance management. Yet these critical processes are often built on tools that were designed to be maximally flexible rather than operationally controlled. The electronic spreadsheet's greatest strength is its almost unlimited adaptability, but that same flexibility introduces risk when spreadsheets become systems of record upon which organizations...
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Walk Through of Accounting & Audit by Design Framework from 50,000 Feet

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This blog post provides a walk through of the Accounting & Audit by Design (A&AD) Framework from 50,000 feet. It shows the moving puzzle pieces. Financial Reporting Framework A&AD relates to financial reporting.  And for financial reporting, you need a financial reporting framework. This blog post, Theory of Financial Reporting Framework  explains what a financial reporting framework is. For A&AD, the financial reporting framework is provided in digital form. Here is a working proof of concept financial reporting framework that I have created and will be using for this walk through.  I am providing three versions of this framework which I call my MINI Financial Reporting Framework. Here is a simple, very basic HTML page that shows the financial reporting framework. Here is a link to a commercial software application that can be used to have a look at the MINI Financial Reporting Framework. And finally, here is a link to that MINI Financial Reporting Fra...
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Employee Benefit Plans

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The Employee Benefits Security Administration (EBSA) which is part of the Department of Labor oversees the following number of benefit plans which cover 155 million workers, retirees, and dependents: (approximately) 2,800,000 health benefit plans,  837,000 private pension plans,  521,000 other welfare benefit plans Of all those benefit plans, somewhere between about 80,000 and 100,000 are required to be audited. Here are some tools and services for complying with the employee benefit plan audit requirement: Fieldguide  (audit) Oath  (audit) Employee benefits compliance software and services Nearly all ERISA-covered employee benefit plans must satisfy some Form 5500 reporting requirement, but only a subset must include audited financial statements. The plan administrator or plan sponsor is responsible for compliance reporting; but an industry of several thousand third party plan administrators, a handful of benefits consulting firms, a handful of benefit plan recordke...
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Seeing Benefits of Atomic Design Methodology

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The Atomic Design Methodology is a very useful way to think about "graphs" and "digital" and "information" and "models".  Tools that a business professional will use need to be special purpose tools not general purpose tools.  Below you see a set of financial reporting frameworks that start small then grow larger and more complex and sophisticated.  But the foundation , the fundamental model  of each is the same. Rather than end up with a kludge ; I have consciously attempted to remove all possible accidental complexity from my Seattle Method framework.  All of these working proof of concepts are available on GitHub . You can also see actual reports using the reporting frameworks in my set of reference implementations of reports . Here are some things to fiddle with to help accountants, auditors, and analysts think about how to work with digital information: ( To see the specific view I am showing, from the hierarchy on the LEFT, in the "...
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Financial Engineer

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The term "financial engineer" is appearing more and more; used differently than the more common definition related to designing financial instruments. The term "financial engineer" is being overloaded. It is my observation that (a) most are getting this notion incorrect and are not really thinking very deeply about this idea and all that is entailed and (b) the term "financial engineer" already means something else. First, let me point something out. Remember the "learn to code" movement? This article, To Code or Not to Code: should lawyers learn to code?  The AICPA had a similar article asking if accountants should learn to code which they have subsequently removed from their web site. And then you have those that believe that coding was going away,  Soon We Won't Program Computers. We'll Train Them Like Dogs,  Well, now it seems that anyone can code using an LLM. And then you have Kurt Cagle saying,  Data, Not Software, Will Determine t...
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Shadow Spreadsheet

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The article, What the spreadsheet knows that the system does not , provides this definition of a shadow spreadsheet: "A shadow spreadsheet is a locally created spreadsheet used alongside or instead of an organisation’s official software to perform work, preserve information or support decisions that the formal system does not adequately handle." The article, Shadow Spreadsheet , provides this definition: "A shadow spreadsheet is the file where a critical metric actually gets produced, outside any system of record, maintained by one person, and unknown to most of the people who consume its output." The article,  The shadow spreadsheet problem , describes a shadow spreadsheet thus: "A shadow spreadsheet (a form of what analysts call shadow IT) is any unofficial tool a team builds to do work the sanctioned system can't. It rarely starts as rebellion. It starts as a workaround: one person exports data, massages it in Excel or Google Sheets to answer a question ...
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Five Types of Systems

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Twenty five years ago,  I literally could not tell you the difference between "syntax" and "semantics".  Over that time, I have made it my business to understand this information so that I could figure out how to build what I was trying to build. This is what I have figured out: As I understand it, there are fundamentally five types or categories of systems : Symbolic : marks (symbols, tokens, strings, formulas) ( example ) Structural : patterns, organization (schemas, tables, models) ( example ) Semantic : concepts (concepts, relationships, meaning) ( example ) Pragmatic : grounding (meaning in use, grounded truth, grounded in real world truth) ( example ; human readable , example2 , prototype ) Cognitive : understanding (interpretation, judgement, understanding) ( example ) Each of these five types or categories or layers of systems have certain specific capabilities.  Each higher number adds additional capabilities beyond what the lower number has. These five typ...
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