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.

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