Digital Financial Reporting

We are in the midst of the fourth industrial revolution.  Here is a list of the all four industrial revolutions:

1. Mechanization, water power, steam power.
2. Mass production, assembly line, electricity.
3. Computer and automation.
4. Cyber physical systems.

There is plenty of information in mainstream media that explains what the fourth industrial revolution is (Wall Street Journal; Forbes; NPR podcast; McKinsey). What the fourth industrial revolution means from a macro perspective is that transformative technologies will change industries.  Accounting, reporting, auditing, and analysis will not receive any sort of exemption from these transformative changes.

Each of the Big 4 CPA firms is providing information about the fourth industrial revolution and general information about risks and benefits and what you might want to do to adapt:

• PWC
• KPMG
• Deloitte
• EY

In their book The Technology Fallacy, authors Gerald C. Kane, Anh Nguyen Phillips, Jonathan R. Copulsky, and Garth R. Andrus dispel the myth that technology is behind digital transformation and shows how people are the real key.  The authors define digital maturity:

Digital maturity is primarily about people and the realization that effective digital transformation involves changes to organizational dynamics and how work gets done.

Society shapes technology's trajectory.  Humans employ technology.  Understanding only technology will get you no where really.  People try and project what all these changes mean.  For example, Deloitte articulates their vision of this transformation related to accounting in The Finance Factory.

But know one really knows exactly what will change, how the changes will unfold, or exactly what the end result will look like.  Everyone will tell you that they have a unique understanding in order to get you to purchase their products.  How do you avoid these snake oil salesmen?

The best way to understand what the fourth industrial revolution will bring is to replace ignorance with knowledge.  I have summarized what I have learned about all this in two documents.  The best and most current is Artificial Intelligence and Knowledge Engineering Basics in a Nutshell.  The second, and very similar to the first, is Computer Empathy.  I am not pushing any specific product, I am not even pushing any specific technology.  I am simply laying out the moving parts of the puzzle as I have come to understand that puzzle and providing information you can use to reduce ignorance and increase knowledge.

My personal focus is in the area of accounting, reporting, auditing, and analysis.

Make no mistake, change is not only inevitable it is imminent.  Human-machine colaboration is how work will be done in the future.  Machine-readable general purpose financial reports are a reality today. Accounting bots already perform useful work. AI assisted audits are real now and will improve even more over time. Accounting workflow is being reshaped. How to audit an organization is being rethought.  Automation of analysis is being explored. Pretty much everyone needs to improve their digital maturity.

What are you doing to avoid becoming road kill?

Accounting Today: Accounting in the fourth industrial revolution

World Economic Forum: The Fourth Industrial Revolution: what it means, how to respond

World Economic Forum: The Fourth Industrial Revolution (Video)

The Fourth Industrial Revolution: The Future of FinTech