Accounting and Audit Data Standards
On April 5, 2019, it was my privilege to arrange and moderate an interoperability summit for detailed accounting and audit data standards efforts, held at theUnited Nations Palais des Nations in Geneva, Switzerland.
The session was designed to make the existence, purpose and development of each of the individual specifications known, to seek to find common ground and incentive to work together for individual and several benefit, and to discuss the UN project to create a common semantic model under UN CEFACT (Centre for Trade Facilitation and Electronic Business).
Over the last thirty years, there have been a number of attempts to provide standard formats to represent and exchange detailed data within ERP/accounting systems – to facilitate exchange with auditors and regulators, to simplify data consolidation, migration and archival, and to create a layer of abstraction for programming interfaces. This includes region- and regulator-specific specifications, generic and holistic specifications, and specifications of not only data formats but also related processes.
Thirty years ago, I wrote in the Rochester Business Journalthat such standards would be very helpful, in response to a Digital advertisement that claimed, “In a perfect world, applications from different companies would work together like they came from the same company” (and then went on to say their “NAS” was “the perfect solution for an imperfect world.” Accounting and audit data standards, I proposed, was what was necessary. With the advent of XML in 1998, I began my own attempt at facilitating the development of such standards, which was donated to XBRL to become XBRL GL.
Around that same time, others came to a similar conclusion. European accountants came together under a group called EDIFICAS, which in the late nineties began to develop the first standards under the UN. In Sweden, a group developed the SIE for similar purposes. Tax detailed transactional data was standardized by the Organization for Economic Cooperation and Development; the American Institute of CPAs published their Audit Data Standards; the ISO is finalizing the first of its Audit Data Collection specifications.
At our session, perhaps more questions were raised than answered, especially in what divides or could bring the different groups to work together. That’s where the ThinkTwenty20 community’s thoughts can be helpful.
· For years, management has expressed its aversion to such standards, with the fear that making it easier to work with organizational data means that the government and auditors will leverage that ease of understanding to do more analytics. Do the potential benefits of more access to management data, lower costs and greater agility and other goods get overpowered by the potential to have that data “used against” management?
· Are holistic solutions that can have a greater overall impact worth the effort compared with point-to point and purpose specific standards that have some immediate benefit but not necessarily revolutionary benefit?
· Does anyone care enough about the ability to more effectively reconcile between different methods of accounting (book vs tax, US GAAP vs IFRS, statutory vs management) and the impact of permanent and timing differences to work with a slightly more complicated standard that can facilitate this reconciliation, or is it all about one type of report at a time and reconciliation can be done other ways (like it is today)?
I walked away with sheets of questions in my own mind on these and many more issues; what are your thoughts on this space?
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