The Louvre museum has an annual balance sheet of a State-owned farm, drawn-up by the scribe responsible for artisans: detailed account of raw materials and workdays for a basketry workshop. Clay, ca. 2040 BC (Ur III).
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Paper-based (or clay-based) and even electronic PDF or HTML financial reports are readable by humans. On the other hand, digital financial reports are readable by both humans and machines.
Machines can therefore do things to help humans create or use digital financial reports that such machines could not help humans with before. This help from machines in creating and using the financial information within a financial report will reduce costs and increase quality. For example,
- A computer can read the reported financial information, understand the information, and can help make sure all of your mathematical computations are correct and intact; make sure everything foots and cross casts and otherwise ticks and ties.
- A computer can read the reported financial information, compare the reported information to disclosure rules, and make sure the creator followed mandated disclosure rules. This is somewhat like a manually created disclosure checklist is used today as a memory jogger.
- Reported information can be easily reconfigured, reformatted, and otherwise repurposed without the need to rekey information because a computer can do all this for you.
- Ambiguity is reduced for humans because for a computer to make use of the information, the information cannot be ambiguous. Making the information easy for a computer to correctly understand also makes it easier for humans to understand.
- Processes can be reliably automated because computers can reliably move information through the work process. Unlike trying to link spreadsheets together, linking digital financial information together can be much more reliable.
- Computer software can adapt itself to specific types of reporting scenarios, again because software leverages and understands the machine readable financial report information.
- Because processes can be automated, the time it takes to create financial reports will be reduced and the human costs of connecting processes can be reduced.
This is not to say that humans will not be involved in the process of creating financial reports. Clearly machines will never be able to exercise judgment. Computers cannot detect all possible mistakes, they can only help humans.
How can all this happen? The more a machine can understand (high semantic clarity), the more a machine can assist humans.
These resources can provide you with additional background information on the possibilities offered by digital financial reporting:
- Digital Isn't Software, It Is a Mindset
- How Data will Transform Business
- Project10X: The Power of Strong Semantics
- Semantics Overview
- Understanding Concept Computing
- Digital Financial Reporting will Change Accounting Work Practices
- Race Against The Machine: How The Digital Revolution Is Accelerating Innovation, Driving Productivity, and Irreversibly Transforming Employment and The Economy (MIT)
All we need to do is get the right software built which understands digital financial reports.