Digital Financial Reporting

Chapter 1 of her book, Double Entry: How the Merchants of Venice Created Modern Finance, Jane Gleeson-White titled Accounting: Our First Communications Technology.

In that first chapter, which you can read online, Gleeson-White discusses the research of French archeologist Denise Schmandt-Bessersat who discovered that the origin of writing was the farmers of Mesopotamia (now Iraq) keeping track of their crops and animals.

There seems to be three primary aspects of the communications technology of accounting: 

1. Medium used to represent information.
2. Number system used to represent information itself.
3. Accounting method used to maintain quality of information.

Based on Gleeson-White's book and some other sources I put together this timeline that combines those three aspects: (click on image to see timeline)

The medium is in GREEN; the number system is in BLUE; and the accounting method is YELLOWISH.  Accounting always seems to adapt for the times.  While specific technologies used to implement the "institution" of accounting change, the institution itself presses on.

It is time for accounting as practiced in the industrial age to transition into the information age.

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Accounting, auditing, and reporting has been out paced by financial innovation. Auditing is broken. Old school financial report creation processes are very inefficient. Processes are inefficient from end-to-end. There is far too much rekeying of information.

As LibraTax put it in a presentation on the future of accounting, "Accountants and auditors are financial doctors."  They go on to say, "We just gave them penicillin."

This is what I believe LibraTax means...

Accountants and auditors use tools to perform the tasks and processes that they need to perform to get their work done.  Those tools evolve.  In the past the tools have been things like clay tablets as the media, Roman numerals, the invention of the 0, Hindu-Arabic numerals, paper as the media, the double-entry bookkeeping model, the calculator, the electronic spreadsheet, the computerized accounting system.

Innovations occur and new tools are invented such as artificial intelligence, immutable digital distributed ledgers, knowledge graphs and other structured information, rules/reasoning/logic/knowledge/insights engines, triple-entry accounting (bookkeeping), cryptocurrency, NFTs, smart contracts, decentralized autonomous organization (DAOs) and such. Add to this the process and quality control techniques of Lean Six Sigma and things are even more reliable. 

These new tools, technologies, and other innovation will have an impact on accounting, reporting, auditing, and analysis that will be similar in nature to the impact the invention of penicillin had on the practice of medicine.

The change will be disruptive, transformational, perhaps even considered foundational.  With any such transformation there will be winners and there will be losers.

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History of Early Materials

Roman Numerals

History of Hindu-Aribic Numerals

Timeline of Numerals and Arithmetic

Mesopotamain Economics and Money

History of Accounting out of Egypt