Universal Global Open Standard for Digital Accounting and Audit Working Papers

Here is the vision.  What if there was a universal global open standard for digital accounting and audit working papers format.

Think of it as "LEGO blocks for accounting, reporting, audit, and analysis".  An example of what I am talking about is available in what is provided by the HL7 FHIR Foundation.

FHIR stands for Fast Healthcare Interoperability Resources. It’s a modern standard for exchanging healthcare information electronically. You can think of FHIR as the “semantic web for health records”.

I learned from HL7 long ago that three things or "levels" of interoperability are NECESSARY for effective exchange of information.  Each layer is necessary but not sufficient on its own. True interoperability; particularly in complex domains like healthcare, finance, or enterprise systems;  *requires* all three working together in concert.  Those three levels of interoperability are:

  • Syntactic interoperability which can be described as each system involved in an information exchange can fundamentally read each other's system information format.  Syntactic interoperability is foundational.  If you don't have syntactic interoperability; you cannot progress to the next level.
  • Structural interoperability which can be described as each system involved in an information exchange understands the structure of the information provided within some syntactic format.  Structural interoperability builds on syntactic interoperability. If you have both syntactic and structural interoperability, you can progress to the next level of information exchange.
  • Semantic interoperability which can be described as the meaning provided within some structure using some syntax is understood and correctly interpreted by both systems involved in an information exchange.

There is no silver bullet. Achieving real interoperability is very hard work.  But the payoff is a big one. Communication using any medium is hard. A shared understanding must be developed. There is complexity that must be dealt with. But this is doable.

Computers are tools.  A computer provides four fundamental capabilities:

  • store information reliably and efficiently (tremendous amounts)
  • retrieve information reliably and efficiently
  • process stored information reliably and efficiently, mechanically repeating the same process over and over
  • instantly accessible information, made available to individuals and more importantly other machine-based processes anytime and anywhere on the planet in real time

But there are major fundamental obstacles that act as hurdles which must be overcome in order to harness that power computers can provide:

  • business professional idiosyncrasies; different business professionals use different terminologies to refer to exactly the same thing
  • information technology idiosyncrasies; information technology professionals use different technology options, techniques, and formats to encode and store, retrieve, and process exactly the same information
  • inconsistent domain understanding of and technology's limitations in expressing interconnections within an area of knowledge
  • computers are dumb beasts; computers don't understand themselves, the programs they run, or the information that they store, retrieve, process, or provide access to; computers are just machines
Yes, computers are dumb beasts.  But those dumb beasts can be made to perform what looks like magic; but it is not magic. It is the talent, skills, and experience of craftsmen and craftswomen that create what looks like magic.

A universal global open standard for digital accounting and audit working papers can eliminate a lot of the drudgery and tediousness of accountancy.  In order to not drown in the ever increasing volume, pace, and complexity caused by technology that same technology can be used to deal with these issues.

The real challenge is getting the conceptualization necessary for semantic interoperability right. Representing that conceptualization, the "semantics" that make up semantic interoperability, within some syntax or within some structure is less of a challenge.

The world already has a universal financial reporting framework; XBRL. Problem solving scheme syntax can be grouped into three primary groups: RDF Star (a.k.a. the Semantic Web Stack), Labeled Property Graphs (a.k.a. LPGs or graph databases), and logic programming.  There is zero probability that everyone is going to agree on one technical syntax or problem solving scheme.

But we are closer than ever in agreeing on a logical conceptualization of a business report.  XBRL International's Open Information Model (OIM) and OMG's Standard Business Report Model (SBRM) are big steps in that direction.  My Seattle Method is based on the XBRL Open Information Model and also the basis for the Standard Business Report Model.  We are getting very close to having one global open standard logical conceptualization of a business report.  Accounting and audit working papers are effectively reports.
I have created a working proof of concept of digital accounting and audit working papers. If one global open standard for digital accounting and audit working papers exists, then software vendors can add value on top of that global open standard within their product offerings.

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