I worked for McDonald’s when I was a kid. In addition to teamwork, the other thing I took away that never left me was; “clean as you go”.
The first task I was charged with when I went to work on Wall Street in March of 1988 was to compile the annual reports of the Fortune 500. I remember waiting for the Exxon annual report. Exxon was number 1 on the Fortune 500 at that time. They are fourth on the list today.
I would check the mail room every day anxiously waiting for the delivery of the annual report. I could hardly wait to review Exxon’s performance and examine the complexities of the largest company on earth at the time. I even asked my boss if I can just run over to the investor relations department at 1251 Avenue of the Americas. I worked at 600 Third Avenue. He said there were 499 others to focus on.
There was no internet or cell phones. No www.sec.gov. Nope. At that time investors needed to order annual and quarterly reports filed with the SEC by phone or through the mail either from the company or from the SEC. The internal audit departments of major companies were also not networked as they are today and certainly not configured in the way we intend them to be when we get our way.
So as I was reading the annual report, I was enamored with the interlocutory committees of the board of directors. Lawrence Rawl was the Chairman and CEO at the time. What confused me most was how an enterprise of such size and complexity with operations in most corners of the world could prepare to report the results of its operations 45 days after its fiscal year end.
I walked into the FinOp’s office. That’s the Financial and Operations Principal. I actually barged in but I knocked. I asked him; “How can a company of such size and complexity prepare for an audit, have the audit completed and report to the world by February 15”!! He laughed at me and said in a gruff manner; “It’s called accrual accounting, kid”. So I responded, “Wait. What do you mean”? He responded, “They estimate based on historical periods what revenue and expenses will be”. I responded, “So…are you saying that the financial statements are not accurate”? He said, “They are accurate pursuant to accrual accounting, kid. Can I get back to work”?
The concept of “clean as you go” was prevalent in my mind at that time.
So that started my journey on a path to examine and eliminate the space between. The space between is the immeasurable amount of space and time between the occurrence of an enterprise transaction and its impact on financial statements and the ability for unauthorized console intervention at any point in the transaction life cycle to intervene, conditionalize or eliminate it altogether.
At the time of my pow wow with the FinOp, internal audit and public audits were about as subjective and conditional as an umbrella in a hurricane and shockingly; even after Worldcom, Enron, Adelphia, the legislation of Sarbanes Oxley and the 2008 financial crisis; they still are. The problem of the space between has not gone away and there is no auditor on earth that can protect 1.5 Billion investors in the world’s enterprises. So don’t expect them to.
Later in my career I heard a rumor that SEC walked into several of the Fortune 50 and discovered a condition that; for the long term benefit and stability of financial markets, could never have been made public. Legend has it that SEC ordered the condition be fixed immediately and that they would be back in three months to review. Not a peep since.
One of my mentors expressed the condition of a natural corrosion of human tendencies to race an enterprise toward competitive advantage by “conditionalizing” contracts and therefore; financial results. I’m being diplomatic.
Its not a secret that some VC backed startups “synthesize” certain user adoption rates and other recorded results. They call it growth hacking.
In the new world, third entries to the blockchain for accounting and other statistics create an immutable, tamper proof means to preserve state and real history and therefore; automate the entire accounting, audit and reporting process.
Our work on the life cycle of the enterprise transaction is based on real time straight through accounting treatment (“STAT”) and reporting on a real time (block wise) basis under the decentralized supervision of and certification by an army of SOC auditors. Every transaction is captured; the state of every device is recorded; the state of the network is recorded and SOC auditors certify all activity, every block as opposed to once per year.
Three months is way too long to wait for a statement of subjective and conditional results. Subjectivity and conditionality is way too risky for 1.5 Billion investors and there’s no limit to the destruction that can be caused by the next financial crisis. Dodd Frank did not solve real world systemic problems.
This is the work of Auditchain and the goal of the DCARPE Alliance. We are working feverishly to transform enterprise management and provide real time immutable transparency to stakeholders in the 21st century globally networked business environment.
We hope you will join us on our journey as we synchronize global business. Decentralize.
Auditchain has developed an MVP of the DCARPE Assurance and Disclosure Platform. CLICK HERE to watch a demo video of the platform.
©2017-2021 Auditchain GmbH. All Rights Reserved.