The Vision

Imagine being able to replace the current "information bucket brigade" that is too manual because of excessive semantic fragmentation and an "integration hairball" which effectively makes accounts have to fulfill the role of what amounts to a "data janitor"; and replace that sort of system (which seems to have become normalized in most people's thinking) with something that works better, faster, and cheaper.

When computers were first introduced in the 1950s to 1980s, what happened was that the manual bookkeeping and accounting practices and processes were observed and then implemented as computerized processes.

The fundamental issue with that is that accounting "stuff" was implemented as a bunch of "strings" that were stored, eventually, in relational databases.

Fast forward to 2012 and the notion of "things" rather than those "strings" (see Things not Strings: Google Launches Knowledge Graphs) and the popularization of the knowledge graph begins.

Now, to make my case for my vision; imagine you want to solve the current problems using the current paradigms.  What is the current paradigm?  Excel.  Excel, or more broadly the traditional electronic spreadsheet, is currently the "glue" that holds the current information bucket brigade that is "the process" together.  By "the process" I mean this:

So that is my "subject domain" or "system of interest" or "domain of understanding" or "area of knowledge" or whatever you might choose to call it.  This is the problem I personally solve, the system.

Now, one can try to solve this problem using the current paradigm of traditional electronic spreadsheets.  But the thing is, that will not work. That cannot work.  Full stop.  Why?  Traditional electronic spreadsheets are impossible to control at scale.  To understand this, read this blog post, Excel is Not a Knowledge Graph; Not all Knowledge Graphs are the Same.

What is necessary is a paradigm change or paradigm shift, per The Kuhn Cycle.  The current paradigm or current "normal science" cannot be used because it simply will not work.  The current paradigm is a dead end and we are in, at least in accounting, a "model crisis" which will result in a "model revolution" which will result in a "paradigm change" and new normal science. A new paradigm which can effectively solve the current problems that we have.

That new paradigm, what will become the new normal science is what I now refer to as "model-driven" electronic spreadsheets or "semantic spreadsheets" or "information blocks".

The new paradigm can be understood by comparing and contrasting what is going on in healthcare, the system they call HL7 FHIR (Fast Healthcare Interoperability Resources).  Have a look at a couple of the pages such as this page about data types, this page about terminologies, and this documentation index.

So if you have a look closely at my Seattle Method, you will see aspects that you see at FHIR.  What I am going to do is recast my Seattle Method resources and add to them ideas that I see in the FHIR list of resources.

I already have working proof of concepts (POCs) for all the boxes above which are colored green.  What I currently have is mainly for financial reporting but I have been able to repurpose much of what I have also for accounting and audit working papers what I call the "mezzanine level".  I have also expanded my initial list of levels to the following:

• Financial Analysis Model Level (i.e. discounted cash flow model, peer comparison, entity comparison, ratio analysis, ROI, Sustainable Growth Rate, etc.)
• Financial Statement Report Level (i.e. general purpose financial statement)
• Accounting and Audit Working Papers and Schedules Level (i.e. lead schedules, trial balance, bank reconciliation, reconciliations, roll forwards, etc.; Mezzanine)
• Financial Transaction Level (i.e. general journal, subsidiary journals and ledgers)
• Business Event Level (i.e. REA, Data Centric Accounting)
• Situation Level (i.e. Situation Theory)

Imagine the notion of an "information Lego".  Imagine all that you can do with those information Legos because they are robust, scalable, durable, and based on global open standard technical syntax, structures, and semantics.  My original list related to the rethinking of financial statements. My current thinking is expanded to all of the information Legos within that graphic above.  The characteristics of those information Legos are:

• Digital first
• Elegance
• Simplicity (i.e. accidental complexity is not allowed to enter the system)
• Model-driven
• Dynamic "pivot table" like artifacts (i.e. global open standard multidimensional model)
• Sematic oriented spreadsheets (i.e. as contrast to the current traditional document oriented electronic spreadsheets)
• GIT for Information (i.e. similar to how Git is used for software code)
• Collaborative
• Transparency (i.e. trace, track, walk, link)
• Human first and in charge where necessary; teaming with automated processes
• Global perspective (i.e. not limited to local databases)
• Datalog level rules-based reasoning (i.e. powerful yet safe and reliable)
• LLMs which leverage rules supplement, probability based reasoning, employed where appropriate
• Knowledge graph oriented (i.e. not limited to relational database capabilities)
• Declarative business rules controlled by business professionals (i.e. rules separated from code)
• Component Concept Management System, CCMS (i.e. DITA, an ISO standard)
• Commodity (i.e. no vendor lock in at the foundational level, vendors complete by adding value to the system foundations)
• Axiomatic system
• Digital distributed ledger enabled
• Leverage non-fundable tokens (i.e. NFTs)

All of the above enable new approaches to create better processes which eliminate the possibility of errors as contrast to having to fix or remediate errors which never should have occurred in the first place. Techniques, practices, and philosophies such as Agile, Lean, and Six Sigma can be employed to reduce errors and vastly improve process quality.

A new era of human/machine teaming is then enabled. Machines will free humans from drudgery and augment the capabilities of humans, amplifying there intelligence.  This is similar to how a calculator helps an accountant do math; just way, way more powerful.

Some task or process currently performed by humans that, if measured, would achieve a sigma level of 3 which is a defect rate of 6.7% (about 67,000 defects per million opportunities) could be improved and could achieve a sigma level of 6 which is a defect rate of 0.00034% (about 4 defects per million opportunities). You are hearing me right, defects go from a whopping 67,000 down to 4.  That value proposition alone is a compelling argument for this vision.

But there is more.  Because of such high quality levels entirely new capabilities are opened up.  Artificial intelligence will literally supercharge what software can achieve.  No magic; no hype.  This is all achieved by very, very hard work.

Rather than being transaction chasing data janitors, the drudgery and monotony of accounting will be reduced and accountants will be opened up to add value in new and important ways.  This is only possible via a paradigm shift.

Additional Information:

• Seattle Method Overview
• Conceptualization
• Modern Spreadsheet
• XBRL is an Extra Fancy Knowledge Graph
• Named Graphs
• Conceptual Models as Social Artifacts
• Carving Up Reality
• Events
• Universal Technology of Accountability
• Financial Data Transparency Act of 2022