Converging Paths to a Modern Approach to Financial Accounting, Reporting, Auditing, and Analysis

Someone made me aware of the paper, REA, Triple-Entry Accounting and Blockchain: Converging Paths to Shared Ledger Systems (by Juan Ignacio Ibañez, Chris N. Bayer, Paolo Tasca and Jiahua Xu).  The authors of the paper say the are striving to correct common misconceptions, acknowledge the influence of key individuals, and map out the overlapping paths of REA, TEA, and blockchain.

As a bit of a side note, I was also made aware of the Triple Entry Accounting Inaugural Conference where people thinking about this stuff will soon meet.

While pulling those three pieces together (REA, TEA, and blockchain) is very useful; personally I would go farther and suggest that the overlapping paths the following pieces should be discussed and figure out how they can be pulled together into a system that works like a well oiled digital machine for financial accounting, reporting, auditing, and analysis:

  • Resources, Events, Agents (REA); Algorithmic Contract Types Unified Standard (ACTUS); and other ways to represent business events or “classic transactions” (see The Joy of Accounting).
  • Single entry bookkeeping, double entry bookkeeping, triple entry bookkeeping, and other ways to record transactions that represent business events of an economic entity.
  • Blockchain, Hashgraphs, and other ways to represent immutable digital distributed ledgers. Including smart contracts, IPFS, NFTs, and all the "stuff" related to blockchain.
  • Smart contracts and logical contracts.
  • Ontologies, taxonomies, knowledge graphs, and other ways to represent knowledge in machine readable (and human readable) form.
  • XBRL, RDF+OWL+SHACL (W3C Semantic Web Stack), ISO PROLOG, ISO GSQL, and other global standard technical syntaxes/formats for physically representing knowledge assemblies in the form of knowledge graph systems.
  • Zero Copy Integration: The traditional approach to data sharing is a complex and risky process where information is copied between data silos generally via ETL or API-based data integration. The Zero-Copy Integration framework, the elimination of silos and copies enables access controls to be set once in a shared data architecture at at the metadata-layer and then universally-enforced across all digital solutions, greatly simplifying lineage, compliance, and auditability.
  • Lean Six Sigma and other principles, techniques, and processes for maintaining high quality.
  • Deductive reasoning (GOFAI), inductive reasoning, abductive reasoning, neuro-symbolic AI, explainable artificial intelligence (XAI), and other reasoning approaches (Logical Systems for Business Professionals)
  • Sequential, forward chaining, backward chaining and other techniques for processing logical information contained in a knowledge assembly.
  • Electronic spreadsheets, semantic spreadsheets, logical spreadsheets, and other approaches to exchanging sets of information.

Additional Information:

Comments

Post a Comment

Popular posts from this blog

Getting Started with Auditchain Luca (now called Luca Suite)

Image
(Note that a newer, production version as opposed to only the development version , of Luca Suite is available) The Innovator's Dilemma points out that disruptive innovations often look like toys that are doing everything wrong. Auditchain Luca , which is part of the Auditchain Suite , is a unique approach to creating a knowledge graph .  To experience using Auditchain Luca, have a look at the Getting Started with Auditchain Luca instructions. Be sure to grab the Excel and JSON import files used for this getting started exercise.   This getting started exercise uses one of several different approaches to getting information into a tool for constructing and viewing professional quality knowledge graphs .  Additional getting started guides will be made available over time. Auditchain Luca might not make sense to you if you don't understand the paradigm shift that is occurring and if you have not shifted your mental map. For the next step in your journey, consider t...
Read more

Relational Knowledge Graph System (RKGS)

Image
Relational Knowledge Graph System (RKGS) is an interesting idea that combines the relational paradigm and the knowledge graph paradigm.  This documentation, Why RKGS , explains the idea. This gets even more interesting with the notion of "relational AI".  RelationalAI is described as follows by the company of the same name, Relational.ai : “RelationalAI is a cloud-based relational knowledge graph management system, with state of the art probabilistic processing and declarative reasoning at scale to make developing Data Applications a superpower for your business.” This notion of knowledge graphs represented in relational databases fits into my belief that knowledge graphs have two aspects: the expression SYNTAX and the logic of what is expressed or SEMANTICS. While the LOGIC of a knowledge graph is always the same regardless of technical syntax used to express that logic; there are many, many different technical syntaxes that can be used to represent a knowledge graph. There...
Read more

Professional System for Creating Financial Reports Leveraging Knowledge Graphs

Image
The document Professional System for Creating Financial Reports Leveraging Knowledge Graphs explains a new approach, a new paradigm, for creating financial reports.  The document provides a practical, nontechnical description of a professional system for creating provably high-quality financial reports where the report creator is using financial reporting schemes (such as US GAAP and IFRS) where report creator is permitted to modify the report model which leverages global standard knowledge graphs represented using XBRL. This new approach is useful, it is highly novel, and the details were highly complicated to pull together.  This is certainly not an incremental innovation.  It is definitely a disruptive innovation and it could very well be a foundational innovation. You can decide which for yourself. Foundational technologies have two dimensions that need to be considered: novelty and complexity. The more novel the technology is, the more effort needed to ensure users ...
Read more