Missing Piece of General Journal Metadata

There is one piece of metadata that is missing from general journal information.  I contend that that piece of metadata is missing because without that metadata it is impossible to reliably automate the process of generating a complete set of primary financial statements and with that missing piece of metadata then it is possible to automate that process.  Further, it is also impossible to use only the general journal information to manually create a complete set of primary financial statements without that piece of information.  And finally, it is impossible to effectively implement useful traceability such as "drill down" without that piece of information.

By "complete set of primary financial statements" I mean balance sheet, income statement, cash flow statement, and statement of changes in equity. (i.e. the four core financial statements)

The missing piece of metadata is the "business event type".

The graphic below, which is a representation in XBRL of a general journal transaction, is the minimum amount of information necessary to flow transactions to a set of primary financial statements. This XBRL based report shows a set of general journal entries for a report which was generated, see record to report.


This is really pretty cut-and-dry and is based on science. This is the most current working prototype of a report created leveraging the missing piece of metadata.

Using Cash and Cash Equivalents as an example, the changes in cash (i.e. the Cash and Cash Equivalents Roll Forward) are as follows and you need this breakdown to create the statement of cash flows.


All the cash flow statement does is take those line items above, which are the business event categories, and adds some subtotals and totals.  See that here:


There are precisely two ways to get that cash flows statement related information: (1) put the information in the accounting system and then let the accounting system tell you the line items for the report or (2) add the information later, usually using some sort of electronic spreadsheet to capture this information.  You have to gather the information some how; it just does not materialize out of thin air.

The statement of changes in equity is similar:


What virtually all accountants currently do is back into the information that goes into the cash flow statement or statement of changes in equity.  The problem with that is you miss an opportunity to find mistakes.

Accountants seem to have normalized this behavior of adding information later rather than fixing their process. Per the 1-10-100 rule, it is better to fix the process (i.e. add the metadata to the general journal entry) as opposed to adding the information later in the process.

Both REA and Data Centric Accounting (DCA) say to add this metadata at the point of the business event occurs.  I would tend to agree.

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