In life, being a control freak is a bug. On the Auditchain Protocol, it’s a feature.
As the old saying goes, “garbage in, garbage out”. So how do you constrain the structure and integrity of accounting information in a continuous environment? Immutability of data and precise declarative controls.
The more controls you have, the more precise the constraints are. Think of financial reporting from a computer science perspective. It is a frequent series of state transitions. A minimum of 7 categories of standardized controls over financial reporting and the Auditchain Protocol are needed for an immutable declarative logical system with external validation.
One standard setter in the financial reporting space believes there are more than 60,000 possible controls that can be developed across all reporting styles just for the US GAAP reporting scheme alone. Most reporting entities use less than 500 controls across all 7 categories of controls. When you consider all global financial reporting schemes, the potential number increases by orders of magnitude.
You can understand all this by starting at the top. Here is a dashboard example of reports filed with the SEC under the IFRS reporting scheme.
All 7 of the categories of the controls in the columns are the absolute minimum of what is needed. Nothing can be left out. If you leave any control or category of controls out and cross your fingers you could luck out, but ignorance of information (because you are not measuring it) or “hopium” does not serve the interests of investors.
Our research work reveals that the quality of most of the reports filed with regulators illustrate a lack of precision. A lack of precision means a lack of controls. The controls used by reporting entities today are not immutable. But we are changing all that.
In an automated accounting, financial reporting, audit, and analysis environment, you MUST have controls over all the moving pieces. There are many.
Today, vast amounts of resources are expended by humans to control these processes. Processes were not automatable because they were not machine readable. Today the controls cannot be trusted because they are not immutable. But, because the reported information is machine readable, you CAN automate tasks/processes. But you need immutable and precise declarative machine-readable controls to substantially reduce vectors. There is ZERO tolerance for error across the accounting, reporting, audit, and analysis information supply chain. Your financial future depends on it.
Here is a simple looking but rather sophisticated financial state presentation.
Make no mistake, this is not a report. It is a declarative logical system of knowledge graphs and subgraphs.
Immutable controls provide the precision in a continuous accounting, reporting, auditing, and analysis ecosystem.
Stay tuned to hear what we do next.
About Auditchain:
Auditchain is a decentralized accounting, reporting, audit and analysis virtual machine that automates and provides proof of assurance on the world’s financial information.
