Coming Transformation of Accounting Information Systems

For decades, accounting information systems were not engineered to ensure that data remained consistent by design. In that paradigm, inconsistency is assumed. Errors inevitably enter the system, and organizations respond by building endless processes (a.k.a. pipelines) that allowed humans to manually check, fix, adjust, and reconcile. This mindset treats truth as something assembled after the fact, through labor‑intensive cleanup. It is a paradigm of perpetual remediation.

This legacy mindset also produces physical fragmentation (data scattered across systems, files, electronic spreadsheets, ledgers, and platforms) and semantic fragmentation (incompatible meanings, definitions, and structures). Once fragmented, the traceability and provenance chain breaks. You cannot reliably follow a fact from its origin to its use. You cannot prove what is true; only reconcile what went wrong.

Accounting & Audit by Design (A&AD) Framework represents a fundamentally different mindset.  

In this paradigm, consistency is expected and enforced. Truth is not reconstructed; it is inherent. Errors are not corrected later; they are prevented from ever entering the system. The system operates within a fenced boundary defined and protected by machine‑interpretable rules. These rules guarantee that every fact admitted into the system is valid, coherent, and compliant.

Because the rules govern both structure and meaning, AA&D eliminates semantic fragmentation. Because the system enforces a single, unified machine‑interpretable boundary, AA&D eliminates physical fragmentation.

Every fact lives inside one coherent semantic space, and every transformation is governed by explicit rules. As a result, the traceability and provenance chain becomes continuous, complete, and defensible. Every fact can be followed from origin to assertion without gaps, ambiguity, or manual reconstruction.

The result is a virtuous cycle; a causal chain that produces trust.  This approach is not without precedent. Lean Six Sigma rules such as the 1-10-100 rule which suggests processes should be fixed rather than remediating errors or dealing with their consequences and "poka-yoke" mistake proofing systems.

Accountants no longer serve as “data janitors” or "transaction chasers" tasked with cleaning up inevitable messes sometimes having to resort to "the plug". Instead, they become curators of the rules that maintain the boundary of correctness. Their work shifts from manual reconciliation to governance, assurance, and the management of epistemic risk. They oversee the integrity of the rule system that ensures the integrity of the data.

AA&D transforms the accounting profession: from custodians of inconsistent data to stewards of a self‑consistent, rule‑governed truth system.

This may seem impossible or perhaps magical and therefore hard to believe.  Or even worse, this may sound like hype. But this is very possible and not magical at all. And this is not hype. A&AD is possible because changes in the environment, intent, and engineering.

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

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 so it was impossible to plan ahead for the longer term.

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.

And this in no way means or proposes that  all the older work should be scrapped. Ditching everything that currently exists is a non starter.  But a significant and conscious refactoring is absolutely in order.

A&AD is a conscious, intentional, and significant refactoring of accounting, reporting, auditing, and analysis.

A&AD is consciously engineered using the engineering design process.  A&AD leverages the well understood characteristics of the double-entry bookkeeping mathematical model as what amounts to a computational substrate. A&AD leverages the ideas created by the manufacturing industry for managing quality, "Lean" and "Six Sigma".  A&AD leverages the ideas created by the software industry related to "Agile" and "Extreme Programming". A&AD leverages the best ideas created by those building the Semantic Web. A&AD leverages artificial intelligence effectively because it is not wedded to any one software application or approach; it uses the best tool for the specific job.  A&AD leverages global open industry standards.  A&AD embraces other good ideas such as how software developers leverage Git and tools like GitHub for managing and versioning code; A&AD applies this to information.  A&AD leverages the idea of a child's toy, the Lego brick, to think about information differently. A&AD consciously separates business rules from code.  A&AD leverages immutable distributed ledgers as publicly available databases. A&AD leverages the Atomic Design Methodology in order to make software easier for business professionals to use to perform their work.

All these ideas are used to synthesize new types of work systems, new types of platforms and ecosystems. New types of knowledge products are possible and new business models.

Simplicity is the requisite for reliability.  It is by the hard work of working through complexity that one arrives at elegant simplicity.

In the hands of someone with no knowledge, trying to cobble all these things together might produce something clumsy, ugly, barely functional; likely a kludge. But the same components in the hands of a skilled craftsmen will create something very different; works of utility, beauty, durability, even elegant.

The aim of A&AD is to describe how modular open system components can be weaved together to yield scalable and therefore industrial strength tools for accountants, auditors, and analysts; tools that are understandable, useful, durable, and maybe perhaps even beautiful and elegant.

These tools are smart tools because information is, by design and with intention, consistent, synchronized, and connected.  Information wants to be free from imperfections.  These tools do not assume inconsistent data that is out of sync and disconnected. They require it.

These are not futuristic ideas. Sooner than you might thing this will be common place. Industrialization will be possible.

To industrialize something means to turn it into a routinized, repeatable, scalable, reliable process that can be done the same way every time. That includes:

  • Standardization: You define the steps clearly so the work is done the same way each time.
  • Repeatability: Anyone (or any machine) can follow the steps and get the same result.
  • Scale: You can do it not just once, but hundreds or thousands of times.
  • Efficiency: You remove unnecessary variation, waste, or improvisation.
  • Transfer from “craft” to “system”: Before industrialization: Work depends on individual skill, judgment, or memory. After industrialization: Work depends on a documented, controlled process.

A simple metaphor will help you understand. If you cook a meal from memory, that’s craft. If you write a recipe that anyone can follow, that’s standardization. If you build a kitchen that can produce 500 identical meals a day, that’s industrialization.

A&AD framework enables this possibility of industrialization.

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.

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