Accounting & Audit by Design (A&AD) Framework

The Accounting & Audit by Design (A&AD) Framework is about freedom from drudgery for accountants, auditors, and analysts. It is about streamlining processes. A&AD is about eliminating the waste of time and energy that goes into transaction chasing. A&AD is about fixing processes that allow mistakes rather than spending time fixing mistakes a process allowed or dealing with the consequences of a mistake escaping from the system undetected.

The following sections will help you understand what the Accounting & Audit by Design (A&AD) Framework is and what it enables.

  • Environment
  • What is A&AD?
  • Why A&AD Now?
  • How does A&AD Work?
  • Business Outcome
Fifty to seventy five year ago it would have been impossible to contemplate something like A&AD; it just was not feasible. We did the best we could to implement accounting information systems using computers and software that we had at the time.  That gave us the paradigm, the normal science per The Kuhn Cycle, that we have today. So, let me explain what A&AD is by starting with the changes in the environment that enabled A&AD to be created and what makes it necessary.

Environment

Fifty to seventy five years ago we did not have the internet, computers were rare, artificial intelligence had not been invented, there was no such thing as a blockchain, mobile phones did not exist, electronic spreadsheets did not exist.

During those fifty to seventy five years, these technologies that we know today did become available and we did the best we could to use the technologies to create the tools we use today for accounting, reporting, auditing, and analysis.

But there really was not an over arching plan.  The typical enterprise implemented software and systems to meet their immediate needs.  And, we did not have the knowledge of the technologies that would even become available.

Further, the volume of information, the pace of that information, and the complexity of that information are all putting stress on traditional approaches.

And now artificial intelligence (AI) is becoming available and intuitively we all know it truly will provide profound benefits; but we don't quite understand all the moving parts of the puzzle right now, but we do understand some of the things that are causing problem related to maximizing what artificial intelligence and the machines AI.

We did not design our current existing accounting information systems to guarantee that all the data we put into those systems stays consistent by design.  As a result, we have to build processes (a.k.a. pipelines) that continually checks, fixes, adjusts, and reconciles inconsistencies because they will occur. This is one mindset.  That is one paradigm.

What is A&AD?

Fundamentally, A&AD is a change in mindset. A&AD is a new paradigm.

Per the A&AD consistency is expected and enforced, truth is not assembled because it is inherent, errors are prevented from ever entering the system, the system is perfect per a "fenced boundary" enforced by machine interpretable rules. The result is a virtuous cycle; a causal chain that yields trust.  Accountants go from performing the drudgery of "data janitors" to curators of the machine interpretable rules that feed this virtuous cycle. Accountants manage governance.  Accountants manage epistemic risk.

But all that is really only a by product. The real value is the opportunity to maximize the utility of artificial intelligence.

A framework is stabilizing scaffolding or essential supporting structure which provides leverage and scalability. A framework is a structured set of guidelines, libraries, conventions, components, best practices, and tools that provides a foundation for building and stabilizing applications or systems. Frameworks are useful because they save time, enforce consistency, and avoid reinventing solutions to common problems.

Fundamentally, A&AD is an open framework that can be leveraged so you don't have to reinvent the wheel. There is no vendor lock in. No specific software vendor is necessary or required.

With A&AD a new platform and ecosystem can be created. Completely new type of work systems can be created which leverage the A&AD framework.

Why A&AD Now?

What people have referred to as the semantic web has matured and is deemed enterprise ready. Other standards such as REA via the ISO/IEC Accounting and Economic Ontology, ACTUS, FIBO, XBRL, OIM, SBRM, and  other standards are free and openly available.

It would be a big mistake for each enterprise to implement accounting, reporting, auditing, and analysis in different proprietary ways.  This would yield increased costs, decreased interoperability, and suboptimal outcomes.  A&AD now is an opportunity to create and even better version(s) of A&AD down the road by collaborating, coordinating, and orchestrating A&AD to serve the needs of all enterprises; large, medium, and small.

The proper fenced boundary could not have been created seventy five years ago, or even fifty years ago, or even 25 years ago. But technology has matured and, while perhaps not perfect or perfectly understood; the time does seem right.  And for enterprises to maximize benefits from artificial intelligence, current enterprise accounting information systems need to be adjusted. Semantic fragmentation needs to be minimized, and preferably eliminated.

How does A&AD Work?

A&AD leverages the characteristics of the double-entry bookkeeping mathematical model. But it is not limited to that model. Financial and nonfinancial information can be processed.  Fundamentally, A&AD is a conceptualization per the triangle of meaning. Representations of A&AD can be implemented in different ways.  Currently, A&AD leverages as much of the W3C semantic web "layer cake" that would make a complete system.

A&AD will enable a refactoring, a transformation really, of accounting information systems.

Business Outcome

The primary business outcome from A&AD is the maximization of the value and utility of artificial intelligence. The primary reason to improve accounting, reporting, audit, and analysis infrastructure is to allow smart software applications to perform at their full potential.

The future of enterprise artificial intelligence will not be won by storing more information.  It will be won by trusted information sources and a trusted process for assembling the right context, the right information, the right knowledge, the right constraints, for the right agent, at the right moment, under the right rules.

The business outcome of A&AD is guaranteed consistency, enforced truth, systems that proactively prevent errors from occurring, and therefore trustworthy systems with which both humans and machine-based agents can interact with effectively. This enables the primary business outcome.

In A&AD consistency is expected and enforced, truth is inherent, errors are prevented from ever entering the system, the system is perfect per a governed "fenced boundary" enforced by rules. The result is a virtuous cycle.  Accountants go from being janitors to curators. Accountants manage governance.  Accountants manage epistemic risk.

How is this possible? Engineering excellence. Clear boundaries, well executed control, XML Schema data types, OWL constraints, SHACL shapes, double-entry bookkeeping semantics, closed-world assumptions, Lean Six Sigma quality control techniques such as poka-yoke mistake proofing, Agile framework, philosophies, and techniques. The system fails loudly.


Note that this paper which explains and demonstrates A&AD will be presented at the 3rd International Conference on Auditing and Artificial Intelligence - 2026.

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