2. About Me
ā¢ Graduate of Pacific Lutheran University with a degree in business administration and a
concentration in accounting.
ā¢ Masters of Business Administration (MBA) from Pacific Lutheran University.
ā¢ Started his public accounting career as an auditor with the international firm then called
Price Waterhouse, served various roles in industry and public accounting for over 35 years.
ā¢ Credited as being the Father of XBRL.
ā¢ In 1997, recipient of the AICPA Innovative User of Technology Award.
ā¢ In 2006, received the AICPA Special Recognition Award for his pioneering role in developing
XBRL.
ā¢ In 2007, recipient of the Pacific Lutheran University Distinguished Alumni Award, his alma
mater.
ā¢ In 2012, named one of the ā125 people of impact in accountingā by the Journal of
Accountancy.
ā¢ Authored numerous publications including XBRL for Dummies, a number of Journal of
Accountancy articles, writes a blog relating to XBRL, and contributed to a number of XBRL
related technical specification and best practices documents.
3. World is Changing
ā¢ āI skate to where the puck is going to be, not
where it has been.ā
ā Wayne Gretzky, legendary Canadian hockey star.
4. The Real Reason to be Afraid of
Artificial Intelligence
ā¢ https://www.youtube.com/watch?v=TRzBk_KuIaM
ā¢ Healthy skepticism
ā¢ Lead
ā¢ Snake oil
ā¢ Ignorance
ā¢ Intellectual laziness
ā¢ Standards
5. Thinking about this Change
ā¢ Techno-optimists overstating the impact of
change is not helpful. Nor is it helpful to
unilaterally disregard all notions that change will
occur; pessimism will not cause change to
disappear. In all likelihood actual change will be in
between the optimistic and pessimistic
predictions.
ā¢ Consciously understanding the dynamics that are
at work is critical to having an informed position.
These changes deserve to be evaluated with a
healthy skepticism.
6. Statement by a Student
ā¢ āThus, as a current accounting student, it is
vital to learn more than the basic data entry
and accounting knowledge. As the robotic
finance trend gradually becomes a norm in all
accounting and finance industries, we must be
keen on learning more technological and
acquiring advanced analytical skills to stay
relevant and on top of the game.ā
8. Fourth Industrial Revolution
-common to each is very significant productivity gains
ā¢ First industrial revolution resulted from the perfection of the steam
engine.
ā¢ Second industrial revolution resulted from the harnessing of oil and
electricity to create mass production, the assembly line, and the
invention of important technologies such as the telephone, the light bulb,
the phonograph, and the internal combustion engine.
ā¢ Third industrial revolution resulted from the change from analog
electronic and mechanical devices to more effective and efficient digital
devices. This era sees the invention of the personal computer, the
internet, and significant advances in information and communications
technology.
ā¢ Fourth industrial revolution includes advances in artificial intelligence;
internetworked physical devices (internet of things ); cyber-physical
systems (which are mechanisms controlled or monitored by computer-
based algorithms); nanotechnology (which is the manipulation of matter
on an atomic, molecular, and supramolecular scale); and biotechnology
(which is the use of organisms and living systems to create products).
10. Think about it This Way
ā¢ Think of a paper map as contrast to a
navigation system of a car that exists today
ā¢ Think of taking a picture with a film camera,
having to get the film developed, getting one
picture; compare that to a taking a digital
photo on your smartphone
ā¢ Think of making a movie using cellulose film
as contrast to digital video, the differences in
workflow of the movie making process
12. The Map is Not the Territory
ā¢ The territory is changing. A paradigm shift has occurred. But
accountants and auditors are using the same map, or mental
model, to think about accounting, reporting auditing, and analysis.
That map is outdated. As Stephen Covey pointed out in his seminal
book, The Seven Habits of Highly Effective People, it is like being in
Chicago and having a map of Detroit and trying to use that map of
Detroit to make it to a specific location in Chicago. It is very
frustrating and tends to be ineffective.
ā¢ In order to understand the changes that are occurring we first need
to help professional accountants update their mental map for
thinking about computers, accounting, reporting, and auditing. The
paradigm has already shifted, the world has changed and there is
no going back.
ā¢ Stephen R. Covey, The Seven Habits of Highly Effective People, page
23.
13. Computer Empathy
ā¢ Psychology Today defines empathy as āthe experience
of understanding another personās condition from their
perspectiveā.
ā¢ Borrowing from that definition and modifying it
slightly, think of computer empathy as the experience
of understanding how computer software works from
the perspective of the computer.
ā¢ Computer empathy is about understanding how a
computer works so that you can better understand
that tool and how to employ that tool in your craft to
perform useful work reliably, repeatable, predictably,
safely.
I have a 4 hour
presentation that
explains computer
empathy
14. Doman of
Business
Professionals
Business
Logic
Doman of
Philosophy
Formal
Logic
Doman of
Information
Technology
Physical
Implementation
of Business
Logic in
Software
Logic Logic
Domain of Knowledge Engineering
Logic
Logic
Logic
Logic
You are paid to solve problems. Coding is just the
tool you use to solve them. Logic is the language
you use to communicate with humans.
Business Logic
-logic is a communications Rosetta Stone
I think a 4 to 8
hour presentation
on logic is
necessary
18. Computers are General Purpose
Machines
ā¢ Computers are machines. The first mechanical computers,
called tabulating machines, were created in the 1900s.
ā¢ A computer has two distinct parts:
ā hardware and
ā software.
ā¢ What makes computers such a unique and compelling tool is not
the hardware, although that is very important; it is the software.
ā¢ Most machines tend to do one thing. Computers are extremely
useful tools because by changing only software you can make
the computer do different things. And because software is
flexible, you can make a computer perform many, many different
tasks. Computers are general purpose machines.
19. Computers are Dumb Beasts
ā¢ Fundamental strengths/capabilities of computers:
ā store tremendous amounts of information reliably
and efficiently
ā retrieve tremendous amounts of information reliably
and efficiently
ā process stored information reliably and efficiently,
mechanically repeating the same process over and
over
ā make information instantly accessible to individuals
and more importantly other machine-based processes
anywhere on the planet in real time
20. Computers are Dumb Beasts
ā¢ Major obstacles to harnessing the power of computers:
ā business professional idiosyncrasies; different business
professionals use different terminologies to refer to exactly
the same thing
ā information technology idiosyncrasies; information
technology professionals use different technology options,
techniques, and formats to encode and store exactly the
same information
ā inconsistent domain understanding of and technology's
limitations in expressing interconnections within a domain
of knowledge
ā computers are dumb beasts; computers don't understand
themselves, the programs they run, or the information
that they work with
21. Components of a Knowledge Based
System
ā¢ Simply put, a knowledge based system is a system that
draws upon the knowledge of human experts that has
been represented in machine-readable form and
stored in a fact database and knowledge base. The
system applies problem solving logic using a problem
solving method to solve problems that normally would
require human effort and thought to solve. The
knowledge based system supplies an explanation and
justification mechanism to help system users to
understand the line of reasoning used and support
conclusions reached by the knowledge based system
and presents that information to the user of the
system.
24. Observation:
ā¢ Everyone seems to be talking about āartificial
intelligenceā in very general terms using
broad brush strokes
ā¢ HOW is artificial intelligence going to change
things? No one is explaining details as to
precisely what is involved when implementing
āartificial intelligenceā
25. Term Artificial Intelligence is Too Vague
Artificial
Intelligence
General Special
Machine
Learning and
Deep Learning
Expert
Systems
26. Artificial Intelligence
ā¢ Artificial intelligence is the automation of activities that
we associate with human thinking and activities such as
decision making, problem solving, learning and so on.
ā¢ There are two types of artificial intelligence, specialized and
generalized:
ā Specialized: An example of specialized artificial intelligence is
programming a computer to play chess. The software performs
one specific task. Specialized artificial intelligence is fairly easy
to achieve.
ā Generalized: An example of generalized artificial intelligence is
the sort of science-fiction stuff you see in the movies. With
generalized artificial intelligence, computers can perform
multiple tasks or be generally intelligent. Why do you only see
this in the movies? Because generalized artificial intelligence is
extremely hard to make work.
28. Expert Systems
ā¢ An expert system is a type of artificial intelligence
ā¢ Expert systems are computer programs that are built
to mimic human behavior and knowledge. Expert
systems are for reconstructing the expertise and
reasoning capabilities of qualified experts within some
limited, narrow domain of knowledge in machine-
readable form. A model of the expertise of a domain
of knowledge of the best practitioners or experts is
formally represented in machine-readable form and
the expert system reaches conclusions or takes actions
based on that information when trying to solve some
problem. The computer program performs tasks that
would otherwise be performed by a human expert.
30. Intelligent Agent
ā¢ An agent is an entity capable of sensing the state of its environment and acting
upon it based on a set of specified rules. An agent performs specific tasks on
behalf of another. In the case of software, an agent is a software program. There
are many different types of intelligent software agents .
32. Three Key Technology Changes
ā¢ Three primary enabling technological innovations are helping driving these significant
changes:
āknowledge-based systems and other
application of artificial intelligence
āXBRL-based structured information (such
as digital financial reports)
āDigital distributed ledgers (block chain,
hash graph, semantic web standard
blockchain)
33. Details of Three Key Technologies
ā¢ Separate presentation
ā¢ Here is a brief, quick synopsis
I think a 1 hour
presentation to
show this
34. Knowledge Based Systems and
other Applications of Artificial
Intelligence
Significant increase in ability to process information
35. Impact: Accountants and Automation
https://www.pwc.com.au/pdf/a-smart-move-pwc-stem-report-april-2015.pdf
36. Lights Out Finance
ā¢ JofA, āWhat CPAs need to do to survive
the automation revolutionā
ā https://www.journalofaccountancy.com/newsletters/2017/jun/survive-automation-revolution.html
ā¢ Wall Street Journal, āItās Digital Crunch
Time for Financeā
ā http://deloitte.wsj.com/cio/2017/02/07/its-digital-crunch-time-for-finance/
ā¢ Kofax Advisor, āIs the Modern CFO Headed for
Extension?ā
ā http://advisor.kofax.com/index.php/is-the-modern-cfo-headed-for-extinction/
37. Robotic Finance
ā¢ Ventana Research, āWelcome to the Age of
Robotic Financeā
ā https://robertkugel.ventanaresearch.com/welcome-to-the-age-of-robotic-finance
ā Webinar:
ā https://www.ventanaresearch.com/webinar/office_of_finance/robotic_finance
ā¢ Harvard Business Review, āCompetitive Landscape
for Machine Intelligenceā
ā https://hbr.org/2016/11/the-competitive-landscape-for-machine-intelligence
38. Internal and External Financial Report Creation Process and Tasks
Internal
Reporting to
Management
Soft Close
Close Ledgers,
Lead Schedules,
Closing Book,
etc.
Consolidation
Variance
Analysis, Peer
Benchmarking
External Report
Creation
Hard Close
Disclosure
Management
XBRL Report
Creation
Internal audit,
Independent
audit
Reconciliation
Processes
Variance
Analysis;
Benchmarking
with Peers
General
Ledger Trial
Balance
Account
Analysis
Exception
Analysis
General
Journal
Entries,
Special Journal
Entries
Transaction
Detail Analysis
Consolidation
of Subsidiaries
and
Intercompany
Eliminations
Planning and
Scheduling
Other Routine
and Non-
Routine Tasks
Research,
Ticking, Tying,
Cross Casting,
and Footing
Extract,
Transform,
Load
Data
Data
Connectors
and Services
Rekeying
Other,
Automated,
Batch, Manual
Currency
Conversions
(if multi-
currency)
GAAP
Conversions
(if multi-
GAAP)
Adjusting,
Reversing,
and Closing
Entries
Information
(Expert system
for creating
financial reports)
Knowledge
base
(private and
public rules)
Fact
Database
Data
Knowledge based system (expert system)
40. Case Study - Tesla
ā¢ āExperts say Tesla has repeated car industry
mistakes from the 1980sā
ā https://arstechnica.com/cars/2018/04/experts-
say-tesla-has-repeated-car-industry-mistakes-
from-the-1980s/
ā¢ Over automation
41. Metadata Management as a Strategic
Imperative
ā¢ Data Preparation as Most Time-Consuming Task
ā āData preparation accounts anywhere from 80ā90% of
the work of data scientists. They spend 60% of their
time on cleaning and organizing data and 19% of their
time on collecting data sets, meaning data scientists
spend around a whopping 80% of their time preparing
and cleaning their data for analysis, what I refer to as
the black hole. The number is about the same for
their least enjoyable parts of data science.ā
ā¢ Global Legal Entity Identifier
ā¢ http://xbrl.squarespace.com/journal/2018/3/16/lei-
improvements.html
44. Annual balance sheet of a State-owned farm which was drawn up by a scribe
which details the account of materials and workdays for a basketry shop in
2040 BC
50. What you can Do with XBRL?
ā¢ Advanced Accounting (less common disclosures)
ā Income from equity method investments
ā Undistributed earnings
ā Preference shares
ā Basis of reporting/Nature of business
ā¢ Intermediate accounting (Disclosure Best Practices)
ā http://xbrlsite-app.azurewebsites.net/DisclosureBestPractices/DisclosureBestPractices.aspx?DisclosureName=BalanceSheet
ā¢ Accounting Information Systems (Extracting
Information)
ā http://xbrlsite.azurewebsites.net/2018/Library/ExtractionP
rototype-2018-03-31.zip 4 hour
presentation that
demonstrates and
explains what you
can do with XBRL-
based Reoprts
51. XBRL is a Knowledge Media
ā¢ In order to make use of a knowledge media
effectively, the following three conditions
must be satisfied:
ā Easy for knowledge bearer to represent
information: The effort and difficulty
required for the knowledge bearer to
successfully formulate the knowledge in
the medium must be as low as possible.
ā Clear, consistent meaning: The meaning
conveyed by the knowledge bearer to
the knowledge receiver must be clear
and easily followed by human beings
and be consistent between different
software applications. The result cannot
be a "black box" or a guessing game and
users of the information should not be
able to derive different knowledge
simply by using a different software
application.
ā High-quality information
representation: The form in which the
knowledge is represented to the
receiver must be as good as possible.
The quality must be high whether the
knowledge receiver is a human-being or
an automated machine-based process.
Sigma level 6 is a good benchmark,
99.99966% accuracy.
52. State of XBRL-based Financial Reports
I have a 4 hour
presentation that
explains XBRL-
based financial
reporting
53. State of XBRL-based Reporting
ā¢ XBRL-based financial reporting by public companies
to SEC is āstate of the artā
ā¢ SEC and FASB are making mistakes, too political,
donāt understand the technology
ā¢ But, XBRL-based filings of public companies provide
evidence as to how to make digital financial
reporting work
ā¢ But, public companies are using ābolt onā approach
to creating XBRL-based reports
ā¢ āRobotic financeā can leverage XBRL standard
56. Digital Distributed Ledgers
ā¢ Characteristics
ā No hackers can corrupt information because there is
no centralized version; there are many versions and
they all must agree
ā Immutable (unchangeable, secure, set in stone)
ā No centralized administrator/authority owns the
system
ā Entries into ledger are ānotarizedā (similar to idea of
notary public)
ā Public or private; permissioned or permission-less
ā Machine readable
ā Stand alone or interlinked with other ledgers
Triple Entry Accounting, https://hackernoon.com/why-everyone-missed-the-most-important-invention-in-the-last-500-years-c90b0151c169
59. Ask Yourself these Questions
ā¢ Did this presentation help you understand the
moving parts of the technology changes that
are coming?
ā¢ Do you think other accountants could benefit
from this information?
ā¢ Do you think accounting students can benefit
from this information?
ā¢ TASK: Create a document that explains this
well.