Brainstorming a Collaborative Work System for Reporting and Audit Teams

In my view, the currently employed work systems used by a reporting team to generate a financial statement and by an audit team to perform and audit of a financial statement that has been generated should be completely destroyed (i.e. use the approach of idealized design) and reconstituted.  Alternatively, currently employed systems might be supplemented or augmented to include additional new capabilities.  These new capabilities would take the following form:

  • A model-driven approach similar to XBRL-based digital financial reports as opposed to the current document oriented approach to creating accounting and audit working papers and schedules
  • Global open standards based rather than proprietary
  • Semantic oriented "things" as contrast to strings
  • Software allows for the creation of and enforcement of good and best practices and canonical templates and leveraging standard work approaches
  • Open-core model software shared by all accounting and audit firms (i.e. proprietary software builds on top of the open-core to add value)
  • Should be as elegant as an iPhone (i.e. not a kludge)
  • Embraces the Agile mindset and framework
  • Embraces Lean Six Sigma principles, practices, and techniques

In a prior post, Collaborative Work Management, I pointed out a class of software application that was used to manage work in a collaborative "ecosystem" and how that differs from what I might call a collaborative work system which is used not to manage work but rather to actually DO the work.

So, this system I am contemplating is used to both perform the accounting/audit work and also to manage that work.

It seems to me that that type of system would be, possibly, a component content management system. Per Wikipedia (paraphrasing), a component content management system (CCMS) is a content management system that manages content at a granular level (component) rather than at the document level.

Per my thinking, the primary component in my CCMS would be the global open standard semantic oriented "information block" as defined by my Theory of Information Blocks. Effectively, each information block is a modern semantic spreadsheet as described in Special Purpose Logical Spreadsheet for Accountants. This resource, Showcase of Capabilities, helps you understand precisely what I mean by "information block" and "semantic spreadsheet".

Additional utility components would be "disclosure" and "topic" as defined by my Theory of Disclosures and Disclosure Mechanics.

A team of accountants and others creating a report and/or a team of auditors, accountants, and others performing and audit are both processes.  Those processes can be explained by the IPO Model (Input-Process-Output).  The information blocks are like information "Legos" that are inputs and outputs of the processes or tasks performed. Some tasks/processes can be automated, others can be partially automated, and still others are not automatable at all and therefore must be performed by humans.

Because creating a report or performing an audit cannot be 100% automated; humans and machines must be able to work together to perform all the tasks/process necessary to complete such projects.  As such, I see the core pattern as looking something like this: (see this blog post which discusses computability)

A financial report creation project or a financial statement audit project is effectively a set of non-computable and computable tasks/processes.  A Mindful Machine of Accountancy is a machine that interacts with those information blocks, disclosures, and topics that exist within a CCMS for the benefit of human and machine teams performing the work related to those projects.  This is a lot like a human with a calculator which helps the human perform math, but just a whole lot more powerful. The Mindful Machine of Accountancy (a.k.a. knowledge based system) uses a hybrid approach to artificial intelligence, #4 in the graphic below, to maximize what the artificial intelligence can bring to the table to help it's human teammate:

A component content management system (CCMS) is a type of Content Management System (CMS). Per Wikipedia (paraphrasing), a content management system (CMS) is computer software used to manage the creation and modification of digital content, basically documents.  Again per Wikipedia, a content management system has two major parts: 

  • a content management application (CMA) as the front-end user interface that allows a user to add, modify, and remove content from the system and 
  • a content delivery application (CDA) that compiles the content and delivers it to where it is needed.

And so, per my vision for which I created an initial working proof of concept (or watch this video) the full set of content is effectively a database, or knowledge base really, that has a knowledge based system sitting on top of it and allows interaction with all that information (a.k.a. a Mindful Machine for Accountancy).

This collaborative work system includes capabilities to not only manage the project but also to perform the work related to the project.

Today, accountants tend to use what amounts to a Birmingham screwdriver for reporting and audits. This is rational given the existence of no better tool. Solution? Create better tools for accountants.

Fundamentally, the core pattern applies to the full accounting information system.  It may not look like that because people start at the wrong location in the chain. Fundamentally, this is about business events that end up as financial transactions, working with that information (a.k.a. transaction chasing), working at different levels of granularity as per the tasks that need to be performed.

Additional Information:

Comments

Post a Comment

Popular posts from this blog

Big Idea for 2025: Semantic Accounting and Audit Working Papers

Image
I began my career in accounting in 1982 as an auditor with Price Waterhouse when accounting and audit working papers and schedules were 100% paper.  But within three months, I was creating many of those same working papers and schedules first in VisiCalc and then Lotus 1-2-3.  I would create those schedules and working papers electronically, then print them out, and tape them into the bundle of paper that supported our audits. The Compaq luggable computer was invented and electronic spreadsheets where even more compelling. Today, accounting and audit working papers tend to be 100% electronic proxies for those paper documents created in Excel or some other electronic spreadsheet, Word or some other word processing document, PDF generated from some word processing document, and maybe HTML.  All of these are presentation oriented proxies for documents and none of them is truly understandable by a computer based process. The next step in the evolution of accounting and audi...
Read more

Microsoft CEO: "AI Agents will Replace All Software"

Image
We have entered the "agentic era"; the era of the agent or intelligent software agent . Others refer to this as the "algorithmic economy".  Maybe think many very intelligent  microservices  exchanging information with each other and can work globally. In an interview with BG2, Microsoft CEO Satya Nadella predicts that (paraphrasing) SaaS (software as a service) is dead and that AI agents will replace all software. The entire interview is the first link in "Additional Information" below.  These three videos provide a focused look at this statement: LinkedIn post including short video AI Insights Explorer video  (Microsoft CEO Predicts: "AI Agents Will Replace ALL Software") Microsoft CEO's Shocking Prediction: "Agents will replace ALL software" Here is my personal interpretation of what Satya Nadella is saying and what it means.  First, Nadella says that we are "on the brink of a monumental shift".  I agree with that statem...
Read more

Professional Study Group for Digital Financial Reporting

Image
Digital financial reporting is a thing.  The IFRS Foundation explains digital financial reporting  in an article, Digital Financial Reporting - Facilitating digital comparability and analysis of financial reports . OFFICIAL VERSION : The IFRS Foundation publishes an XBRL taxonomy for IFRS for SMEs (2024).  You can find official information about that XBRL taxonomy here on this web page, IFRS for SMEs as Published by IFRS Foundation (2024) . (Also see this PDF, IFRS Taxonomy Illustrated .) Since that official XBRL taxonomy is effectively a "pick list" created from the perspective of standards setters (i.e. not very practical, easy to use, and intended for ease of use by reporting economic entities);  ENHANCED VERSION : I have created an enhanced version of that same XBRL taxonomy, see  IFRS for SMEs 2024) - ENHANCED (Work in Progress) . The enhancements make the IFRS for SMEs XBRL taxonomy more useful in many different ways.  The enhancements are driven...
Read more