Regulatory Harmonization; Algorithmic Regulation

Regulation is information. For example, a public company submitting an XBRL-based report to the U.S. Securities and Exchange Commission (SEC) is an information exchange from the public company to the SEC.  The SEC then makes that information available to the public to make use of.

That information is a machine-readable digital signal published by the reporting public company.  That XBRL-based information sends a digital signal to the SEC and to those in the public markets that want to use that publicly available information. That digital signal sends a machine-readable message that can also be used to generate a human-readable signal (HTML, PDF).  

What message are you sending in your digital signal? A lot of public companies are making mistakes in their machine-readable digital signal.  For example, my personal measurements clearly show that the relations between high-level financial concepts in those messages have mistakes. I am able to extract information from those XBRL-based reports using a simple tool like Microsoft Excel and I am not even a very good programmer.  How does that reflect on the public company creating the report, software vendors providing tools to the public companies, and the auditors of those public companies?  What might investor relations departments of public companies think about this?

Many public companies that provide XBRL-based information to the SEC also provide XBRL-based information to some other regulator.  For example,

  • Depository institutions that submit XBRL-based information to the SEC also must submit XBRL-based information to the Federal Deposit Insurance Corporation (FDIC).
  • Energy companies that submit XBRL-based information to the SEC also must submit XBRL-based information to the Federal Energy Regulatory Commission (FERC).
  • Insurance companies that submit XBRL-based information to the SEC also must submit information electronically (not XBRL currently) to the National Association of Insurance Commissioners (NAIC).
The SEC, FDIC, FERC, and NAIC each use different information formats. In addition, each of these public companies submits information to the Internal Revenue Service (IRS).


There are a lot of different terms used to describe what I will refer to as "algorithmic regulation". This is an opportunity for governments to both save a ton of money and increase customer service to those that need to interact with the government.

Understandable knowledge representations and effective reasoning using those representations will change a lot of things. This will not be simply an incremental change; it will be a paradigm shift. Governments are already responding to this opportunity.  Australia says that they have saved billions.  In the United States, the Financial Data Transparency Act of 2022 is now law.

Make no mistake. Algorithmic regulation is coming.  Business professionals, including accountants, not only need to become literate in these techniques; they need to become fluent and even attain mastery.

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