Canonical Accounting Working Papers

Declarative rules have many of the same characteristics of software code.  One similar characteristic is that you can create a declarative rule once; then that rule can be used many times by many different people similar to software.

The term “canonical” as I am using the term means “conforming to well-established good/best practices and officially accepted principle, patterns or rules".  A canonical example is something that is "according to the cannon" or the "preferred notation for some object".  An "archetype" or the original model from which something is developed or made.

Think "template". Or maybe "jig".  Basically, think tools that are used to control something.

Let's face it, the average accountant is, well, "average".  This is typical of pretty much every profession; skill level follows a bell shaped curve.  

For example, think of pizza.  Does everyone that ever made pizza have the same skill for making pizza.  Some pizza is exceptional,  other pizza can be less than exceptional.  Or, think of a brick layer or mason. A brick wall is made of exactly two things: bricks and mortar.  Freemasons where the best-of-the-best in terms of putting bricks and mortar together to form brick walls.

But if you establish a set of good/best practices, created some canonical example or archetype that everyone was expected to follow, you cannot be sure they actually followed that canonical example unless you could control that process. Understanding what needs to be controlled is a big step toward actually being able to control a process.  The Seattle Method is basically a control process.  

This is not about providing a rigid process; it is about providing flexibility in precisely the right places and guardrails to help people along.

If you can establish a canon and then control that canon at scale, then you can skew the bell shaped curve and make everybody better.


Think about the tools we have available today.  Excel is too flexible.  But an ERP system is too inflexible.  What if there was something in the middle, between Excel and an ERP system, that could effectively fill the gap.  What if the average accountant could build what amounted to a "mini application" that does one specific thing, followed a specific canon (template), that allowed you to complete one specific task effectively including making modifications to the template.  Imagine a thousand of these "mini applications" filling in gaps in work processes.  Think "information Legos".

Now, think about accounting working papers.  A trial balance.  A lead schedule.  A bank reconciliation.  An accounts receivable aging. I could go on and on naming different accounting working papers and schedules that thousands, if no millions, of accountants construct, typically in Excel these days, and a good portion of those spreadsheets have at least one error and can be hard to understand because they tend to not be standard.

Excel is not a very good tool for constructing systems at scale.

What if there was a tool, better than Excel, think semantic spreadsheet, for these specific tasks, constructing accounting working papers and schedules.  What if those accounting working papers where (a) standardized, (b) best practices based, (c) scalable, and (d) better, faster, and cheaper than how you do things today. What if this new type of spreadsheet where controllable using standards based declarative rules to make certain that there were no errors in the spreadsheet.

Here is a working prototype that I created: Canonical Accounting Working Papers

Here is a video what walks you through the basics: Canonical Accounting Working Papers (video)

The accounting working papers you see are basic prototypes but you should get the idea. For example, a lead schedule is not just a spreadsheet with account numbers and values typed into it; it is an axiomatic system.  The system keeps you from making a mistake and if you do make some sort of mistake the mistake stands out like a sore thumb.  You can organize the axiomatic system in the form of a closing book for creating a financial statement, a set of audit working papers, or an internal or external financial statement.  Here is a really simple financial statement that you can cut your teeth on.

Have a look at what I created and let me know what you think, message me on LinkedIn.

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