Digital Financial Reporting

Poka-yoke (not to be confused with the Hawaiian raw fish salad, poke) is a technique used to prevent mistakes through smarter design. Poka-yoke is a Japanese term that means "mistake-proofing". A poka-yoke is any mechanism consciously added to a process that helps an equipment operator avoid mistakes. Its purpose is to eliminate defects by preventing, correcting, or drawing attention to human errors as the errors occur.

For example, consider the graphic  below.  You want someone to plug the plug into the receptacle such that positive and negative of the plug and receptacle match up. Inadvertently reversing this would have catastrophic consequences.  In the top part of the graphic notice that it is possible to make a mistake but in the bottom part of the graphic a mistake would be impossible because of the size differences in the positive and negative receptacle and plug.

(Image from Process Exam, Six Sigma Tools - Poka-yoke)

Poka-yoke is a Lean Six Sigma technique. You can use techniques such as this to build better software.  My MBA is in these sorts of quality control techniques.  At the time these were called "World Class Manufacturing Techniques".  Today people call these techniques "Lean" or "Six Sigma" or "Lean Six Sigma".  While Lean Six Sigma was developed by the manufacturing sector, these techniques are applicable to literally any system.

In the document Putting the Expertise into XBRL-based Knowledge Based Systems for Creating Financial Reports, Hamed Mousavi and I explain how we are leveraging things like poka-yoke, patterns, compound objects, and other techniques to create an expert system for creating financial reports.  That software we are creating is part of the modern finance platform which, we believe, will replace the old school approaches for creating financial reports.

If you read the document Computer Empathy you will recognize how dumb computers are but also what it takes to get computers to reliably perform work for you.

An expert system for creating financial reports is a pretty novel idea, I believe.  Time will tell if we can make this work.  There is a tremendous amount of complexity that is required to be coordinated to pull this off appropriately.  We believe that the modern finance platform will not only disrupt, but will significantly transform accounting, reporting, auditing, and analysis.  Time will tell whether we are right or whether we are wrong.

Some people (ok...well, at least one person) call accounting "history's sexiest subject". I don't really know if it is sexy, but it is certainly interesting. Digital distributed ledgers, triple-entry accounting, artificial intelligence, digital financial reports; what a great time to be an accountant if you understand what is going on.

Don't quite understand?  Well, start by reading Computer Empathy. Don't be sold a bill of goods by the snake oil salesmen!