1. Introduction
This resource is the landing page of the Accounting Oracle Machine. The Accounting Oracle Machine is machine-readable and human-readable resources for accounting,
reporting, auditing, and analysis (collectively referred to as 'accountancy'). The objective is to provide a tool for modern accountancy; accountancy in a digital
environment. (Modern Accountancy)
NOTE: This version of the Accounting Oracle Machine is a working proof of concept that is used to figure out how to best organize this resource.
An Accounting Oracle Machine is machine-readable information that is also convertable into human-readable information. This is as contrast to resources
like the AICPA Best Practices in Presentation and Disclosure or
GAAP Guides or
disclosure checklist.
1.0 Double-entry Bookkeeping
The double-entry bookkeeping model is a framework into which any financial reporting scheme must fit. Saying this another way, the fact that a reporting scheme
fits into the double-entry bookkeeping mathematical model is what make the scheme a financial reporting scheme (as contrast to a non-financial reporting scheme).
The double-entry bookkeeping model is the mathematical model, the foundation, upon which financial reporting schemes are constructed. Double-entry bookkeeping was invented in 1211 by Italian bankers and
formally documented in 1494 by Luca Pacioli.
[DOUBLE-ENTRY-BOOKKEEPING]
ISSUE: Work in progress.
1.1 Accounting Equation
The accounting equation can be viewed as the simplist of all possible financial reporting schemes. The accounting equation is used to tie double-entry bookkeeping model of DEBITS = CREDITS
into a financial reporting model which may be ASSETS = LIABILITIES + EQUITY or maybe ASSETS - LIABILITIES = NET ASSETS or some other version of the accounting equation.
The accounting equation (a.k.a. fundamental accounting equation, balance sheet equation) is the cornerstone of financial reporting. The accounting equation is common knowledge.
The accounting equation has multiple different versions, but all versions reconcile to this one fundamental model. This financial reporting scheme that documents the accounting equation
is a basic example and training tool.
[ACCOUNTING-EQUATION]
ISSUE: This should, perhaps, also include the net assets based accounting equation also.
1.2 Elements of Financial Statement (SFAC 6)
SFAC6, which never really mentions the accounting equation by name, actually expands upon the basic accounting equation's three elements (assets, liabilities, equity), builiding it out into ten elements.
The FASB's Elements of Financial Statements (
[FASB-CON6]) defines 10 elements that make up financial statements which are created using US GAAP.
This prototype creates a reporting scheme for that very basic example, using it as a basic financial statement for training purposes.
ISSUE: This is for US GAAP. Another version of this should be done for IFRS's high level elements.
1.3 Elements of Financial Statement (SFAC 8)
SFAC8, which really is an updated version of SFAC6, introduces the notion that different accounting equations can be represented in the same financial reporting scheme, differented using the notion of a reporting style.
The FASB's Elements of Financial Statements (
[FASB-SFAC8]) defines 10 elements that make up financial statements which are created using US GAAP.
This prototype creates a reporting scheme for that very basic example, using it as a basic financial statement for training purposes. The SFAC 8 example builds on the SFAC 6 example and this
time does represent Net Assets and introduces the notion of a reporting style.
ISSUE: Again, this example is for US GAAP. Another version of the elements of financial statements should be created for IFRS's high level elements. That will be forth coming.
1.4 Common Elements of Financial Statement (Four Statement Model)
Common elements expands on the preceeding ideas, introduces the notion of the cash flow statement which is not addressed by SFAC6, SFAC8, or the accounting equation; and introduces the notion of the four statement report model.
This resource begins to look more like a general purpose financial statement, introducing the notion of the four statement financial report model: balance sheet, income statement,
changes in equity statement, and cash flow statement.
1.5 MINI Financial Reporting Scheme
The MINI financial reporting scheme builds on the preceeding reporting schemes and creates the first 'real' looking financial reporting scheme.
This resource begins to look more like a real financial reporting scheme, introducing the idea of financial reporting schemes. With this MINI financial reporting scheme,
a basic but real looking general purpose financial report can be constructed. Again, this example consciously avoids the use of noncore dimensions which will be introduced in the next
example financial reporting scheme.
1.6 PROOF
The PROOF financial reporting scheme builds on the preceeding reporting schemes adding additional logical patterns. This includes adding the notion of 'dimensions' and dimensional information and additional logical information patterns.
This resource provides a complete set of the logical information patterns that would appear in a financial report. This resources introduces the notion of noncore dimensions.
All previous resources used only core dimensions. This 'financial reporting scheme' is less like a real reportinng scheme
and more about providing a suscint example that can be used to focus on report logic. This is an excellent teaching tool and software testing tool.
1.7 AASB 1060 Financial Reporting Scheme
This resource provides the best example of a financial reporting scheme represented using good practices/best practices. This is a very real looking
financial reporting scheme created using an actual published financial reporting scheme in Australia, General Purpose Financial Statements – Simplified Disclosures for For-Profit and Not-for-Profit Tier 2 Entities.
About 80% of the financial reporting scheme is represented (I figure) and everything represented completely tested and proven to be functioning properly. The point is, a financial reporting scheme
cannot be known to be working effectively unless it is actually tested to PROVE that it works.
1.8 US Generally Accepted Accounting Principles (US GAAP)
This resource provides machine-readable and human-readable information related to financial reporting using US GAAP.
ISSUE: This is not complete.
1.9 International Financial Reporting Standards (IFRS)
This resource provides machine-readable and human-readable information related to financial reporting using IFRS.
ISSUE: This is not complete.
1.10 References
The following is a summary of normative and informative references helpful in understanding this information:
1.11 Software (Appendix)
The following is a summary software which are known to process the accounting oracle machine artifacts correctly: