A VentureBeat article by Gary Grossman, Is AI in a golden age or on the verge of a new winter?, points out some of the growing negative feedback about artificial intelligence. This is not new. Others have pointed out that AI is a fragile house of cards that what people are creating tend to be cheap parlor tricks and that 81% of business leaders don't understand AI. The VentureBeat article provides the Gartner Hype Cycle for Artificial Intelligence:
Who knows. Maybe we are in the midst of an "AI winter" or maybe we are on the verge of something really big. Picking wrong can have grave consequences.
In my humbel opinion, certain aspects of financial reporting are going to contribute to AI and financial reporting entering a golden age. Here is why:
- Key to AI is semantics and financial reporting is rich with standard semantics. The mathematics of double entry accouting were created in about 1211, documented in 1494, details were built out over the past 100 years, and international financial reporting standards have existed since 1975.
- Key to AI is some syntax, preferably a standard syntax. XBRL provided that beginning in 1999 and the standards have been stable since 2003.
- Experimentation has been taking place since 2009 when the U.S. SEC started accepting XBRL-based reports; now we have about 6,000 economic entities X four reports per year X 10 years of reports. That is excellent information even though there are some quality issues with reported information. Knowlegeable people can easily distinguish the good from the bad.
- We already have working proof of concepts that solve real issues for financial reporting. No one really disputes that fact that financial reporting is ineffecient.
- Because XBRL-based reports are "digital", specific report information can be addressed which opens up the possibility of leveraging Lean Six Sigma philosophies and technicques to automate quality control.
- Immutable digital distributed ledgers make all of this even more interesting.
Where are you on the AI Ladder?