prof. William E. McCarthy, Professor Accounting & Information Systems at Michigan State University The REA-invention of Double Entry Bookkeeping - Moving Accounting Back to the Center of Enterprise Information Architectures

1. The REA-invention of Thank you
Double Entry for inviting
Bookkeeping: Bill & me
Moving Accounting across
Back to the Center
of Enterprise
Information
&
Architectures

2. In the spirit of Ghent
The Ghent Altarpiece (Het Lams Gods)
Let’s go back a few years to ?

3. In the year 1432
• Gutenberg’s printing press was impending, and the advanced use of
Hindu-Arabic numbers was becoming prevalent in Europe.
Technological Imperative
• Copernicus and Columbus had not yet been born, but it was the dawn of
the Renaissance and the Age of Discovery. Increasing trade ventures were
causing “a blizzard of transactions” that needed accurate and reliable
documentation and stewardship. Commercial Imperative
• Where was accounting (enterprise information systems) in the 1400s?
– Accounting had been around in various locales for 3,000 years already
in the form of tokens, clay jars, and sticks. There are even claims that
accounting caused the invention of writing.
– Counting artifacts preceded van Eyck by thousands of years.
– In Italy, double-entry accounting had already started in the 1300s
(reached Bruges soon thereafter) .
– Double-entry spread faster once books were available detailing its
operation. Technological Imperative

4. In his Summa in 1494, Luca Pacioli codified the
Venetian method of bookkeeping which had
evolved to deal with the blizzard of commercial
transactions at the dawn of the Renaissance and
the Age of Exploration. Trading ventures he
mentions include those with the cities of Antwerp
and Bruges.

5. Luca Pacioli – “Father” of Accounting
• Debit – from Italian
“debito” -- owed to the
proprietor
• Credit – from Italian
“credito” – owed from the
proprietor
• BOOKS:
– Memorandum
– Journal (L)
– Ledger (G)

6. Accounting systems through the ages
Principal Enterprise Economic Activities (Events)
(reality)
“ transactional
memory external
to the parties of
the exchange”
Surrogates notched
stick
(accounting
system)
Agrarian Age

7. Accounting systems through the ages
Principal Enterprise Economic Activities (Events)
(reality)
“ transactional
memory external
to the parties of
the exchange”
memorandum
Journal .
Surrogates notched
A/ Rec ….
stick
(accounting Sales…
system)
Luca Pacioli & double-entry
Ledger .
accounting (1494) spread
throughout Europe and
ooo beyond. Engineered
accounting artifacts
facilitated this change and
Agrarian Age Mercantile Age evolution.

8. Documentation Systematic
and
LEGEND
Accuracy and
Stewardship Reliability
Commercial
Imperative Path-Creation
Change
Path-
Creation
Design
Path-Dependent
Change
Changing
Business
Models and
Accounts,
Expectations
Journals
(Commercial
and
Imperative)
Ledgers
Double-Entry
Accounting
Innovation:
Narrative Creation of New
descriptions and Artifacts
single-entry (Technological
records Imperative)
Counting &
Calculating
Methods
Path-
Dependent
Design
Technological
Imperative
SOURCE:
Recording and Hindu-Arabic Semantic Geerts &
Counting Numerals and
Technologies. Arithmetic
Web
Technologies
McCarthy
Advances

9. Fast forward to the last 50 years
(1962 – 2012)
• Technological Imperatives:
– Computers, advanced tracking technologies,
markup languages, database semantics, etc.
• Commercial Imperatives:
– Efficiency, multidimensionality,
comprehensiveness, interoperability, etc.

10. Accounting systems through the ages
Principal Enterprise Economic Activities (Events)
“ transactional
memory external to
the parties of the
exchange”
source
jar memorandum document
Journal
Surrogates notched
A/ Rec ….
. computer
stick files and
Sales… General
Ledger
Ledger . Financial
ooo
statements
Agrarian Age Mercantile Age Industrial Age

11. Accounting systems through the ages
Principal Enterprise Economic Activities (Events)
“ transactional
memory external to
the parties of the
exchange”
source
jar memorandum document
Journal
Surrogates notched
A/ Rec ….
. computer
stick files and
Sales… General
Ledger
Ledger . Financial
ooo
statements
Agrarian Age Mercantile Age Industrial Age

12. Accounting systems through the ages
Principal Enterprise Economic Activities (Events)
“ transactional
memory external to
the parties of the
exchange”
source
jar memorandum document
Journal
Surrogates notched
A/ Rec ….
. computer
stick files and
Sales… General
Ledger
Ledger . Financial
ooo
statements
Agrarian Age Mercantile Age Industrial Age

13. What happens to modern
computer systems when you
“pave these cow-paths” ??

14. Accounting systems through the ages
Principal Enterprise Economic Activities (Events)
“ transactional
memory external to
the parties of the
exchange”
source
jar memorandum document
Surrogates notched
stick
Journal
A/ Rec ….
Sales…
Ledger
ooo
.
.
X computer
files and
General
Ledger
Financial
statements
Agrarian Age Mercantile Age Industrial Age

15. What’s wrong with the traditional accounting system?
(why not pave the cowpaths ??)
• Its dimensions are limited (need
multidimensional focus)
Source • Its classification schemes (CoA)
document
are not always appropriate (need
more semantic focus on modeling
of reality)
• Its aggregation level is too high
and predetermined (determined by
M/Files and closing, adjusting, and costing
general ledger procedures)
• Its degree of integration with other
systems is limited (need links with
Financial types, commitments, and other data
Statements from supply chain, production,
marketing, human resources, etc.)

16. Accounting engineering artifacts
gone bad
• Crazy code block expansions
• Period costing & matching
• Absorption costing
• Activity-based accounting (G/L
centered)
• LIFO, SoYD
• Grundrechnung ?

17. FOR EXAMPLE: ACCOUNT-CODING of
ECONOMIC PHENOMENA
account balance
Inventory $$$$$
account-code balance
Inventory
Inventory Color $$$$$
Type
account-code
balance
Inventory Distribution Sales-
Inventory Type Size Color --- person Customer $$$$$
Channel

18. double-entry
accounting
Enterprise
economic
phenomena
double entry
sludge
see Vandenbosscheeter and Wortmann
(REA Workshop 2006)

19. Documentation Systematic Temporal
and and LEGEND
Accuracy and Multidimensionality
Stewardship Efficiency Granular Independent Automated
Reliability and Integration
Comprehensiveness Interoperability Reasoning
Commercial
Imperative Path-Creation
Change
Path-
Creation
Design
Path-Dependent
Change
Changing
Business
Models and
Accounts,
Transaction Expectations
Journals Activity-
and Master (Commercial
and Based
Files (GL) Imperative)
Ledgers Costing
Double-Entry
Accounting
Facet- XBRL
Coded GL
Accounts Innovation:
Narrative Creation of New
descriptions and Artifacts
Digital (Technological
single-entry
Single Imperative)
records
Counting & Entry
Calculating
Methods
Path-
Dependent
Design
Technological
Imperative
SOURCE:
Recording and Hindu-Arabic Computers Advanced Markup Database Semantic Geerts &
Counting Numerals and Tracking Languages Technologies
Technologies. Arithmetic Technologies
Web
Technologies
McCarthy
Advances

20. Principal Enterprise Economic Activities
“ transactional
memory external to
the parties of the
exchange”
source
jar memorandum document
Journal computer
Surrogates notched
A/ Rec ….
.
stick files and
Sales… General
Ledger
Ledger . Financial
ooo
statements
Agrarian Age Mercantile Age Industrial Age

21. going beyond the bookkeeping to
natural language descriptions

22. Accounting Systems Evolution
Principal Enterprise Economic Activities
“ transactional
memory external
to the parties of Economic storytelling
the exchange”
with semantic models of
value creation by firms
source
jar memorandum document
Journal
Surrogates notched
A/ Rec ….
. computer
stick files and
Sales… General Financial Other
Ledger Reporting Views of
View Enterprise
Event-chains
Ledger . Financial
ooo
statements
Agrarian Age Mercantile Age Industrial Age Enterprise Systems
Age

23. Cookie-Monster (the customer) and Elmo
(the entrepreneur) meet in the (real or
virtual) marketplace, thus setting the
stage for an Economic Exchange

24. Cookie-Monster and Elmo engage in a
SALE (transfer of Cookie Inventory)

25. Cookie-Monster and Elmo engage in a
PAYMENT (transfer of Cash)

27. accounts-receivable sales
1.00 1.00 1.00
cash
1.00
cost-of-goods-sold inventory
.80 .80

29. ELMO sold cookie
COOKIE-MONSTER

30. ELMO received cash
COOKIE-MONSTER

31. Economic Resource
Economic Agent
insideParticipate
Economic Event
stock-flow
Economic Agent
outsideParticipate

32. Economic Resource
Economic Agent
insideParticipate
Economic Event
stock-flow
Economic Agent
outsideParticipate

33. Economic Resource
Economic Agent
insideParticipate
Economic Event
stock-flow
Economic Agent
outsideParticipate
duality
Economic Agent
insideParticipate
Economic Event
stock-flow
Economic Agent
outsideParticipate
Economic Resource
Modeling requited transactions with REA patterns

34. <<Economic Agent>> <<Economic Event>>
Customer Sale
1..1
customerNumber invoiceNumber
customerName outsideParticipate numberOfLineItems
discountPerCent
1..1 0..* saleAmount 1..*
receivableBalance discountedAmount Stockflow
costOfGoodsSold lineItemQuantity
updateReceivableBalance() lineItemPrice
calculateNumberOfLineItems()
calculateSaleAmount()
calculateDiscountedAmount() 0..*
calculateCostOfGoodsSold()
1..1
WholesaleCustomer RetailCustomer
statusCategoryCode <<Economic Resource>>
mainWarehouseCity
statusCategoryName Cookies
productNumber
tellAboutSelf() tellAboutSelf() description
currentUnitPrice
unitCost
calculateUnitCost()

35. COOKIE COOKIE-stockflow-SALE
Product# Description Price Cost Product# Invoice# Quantity
P-1 Chocolate 1.05 .90 P-2 I-1 5
Chip
P-3 I-1 10
P-2 Chocolate 1.00 .80
P-2 I-2 20
P-3 Peanut .95 .78 P-4 I-3 9
Butter
P-1 I-3 1
P-4 Pecan 1.10 .94
P-2 I-4 1
SALE-duality-CASH_RECEIPT
SALE
Sale Invoice Payment Amount
Invoice# Amount Date Cost Seller# Buyer# # Timestamp Applied
I-1 14.75 1JUL 11.80 E-1234 C-987 I-1 2JUL0830 14.75
I-2 20.00 2JUL 16.00 E-1234 C-888 I-2 3JUL0800 2.00
I-3 10.95 3JUL 9.36 E-1234 C-999 I-2 5JUL0800 18.00
I-4 1.00 5JUL .80 E-1234 C-987 I-3 8JUL1145 6.00
I-4 8JUL1200 1.00
An accounting database

36. COOKIES COOKIES-stockflow-SALE
Product# Description Price Cost Product# Invoice# Quantity
P-1 Chocolate 1.05 .90 P-2 I-1 10
Chip
P-3 I-1 5
P-2 Chocolate 1.00 .80 P-2 I-2 20
P-4 I-3 9
Peanut
Butter P-1 I-3 1
P-3 .95 .78
P-2 I-4 1
P-4 Pecan 1.10 .94
SALE-duality-PAYMENT
SALE
Sale Invoice Payment Amount
Invoice# Amount Date Cost Seller# Buyer# # Timestamp Applied
I-1 14.75 1JUL 11.80 E-1234 C-987 I-1 2JUL0830 14.75
I-2 20.00 2JUL 16.00 E-1234 C-888 I-2 3JUL0800 2.00
I-3 10.95 3JUL 9.36 E-1234 C-999 I-2 5JUL0800 18.00
I-4 1.00 5JUL .80 E-1234 C-987 I-3 8JUL1145 6.00
I-4 8JUL1200 1.00
Story of why this invoice amount to $14.75 ??

37. Business
Business Value/Supply
workflow Process
Event Chain
Phases
networked
Economic Economic Business
Resource Agreement governs Process
Type
specifies bundles
specifies
Economic Economic
typify reciprocal Commitment specifies Agent Type
Economic
policy Event Type
fulfills
policy typify
typify
from-participate Economic
Economic stock-flow Economic
Resource Event Agent
to-participate
duality
Adding temporal and granular expansion, process phases,
and business events to REA

38. Cash Labor Labor
Payroll
Cash
Labor Maintained Car
Process Labor Maintenance Revenue
Car
Labor Process Process
Labor
Cash
Cash
Acquisition
Process Car
Revenue
Rental
Customer
Agent
Labor Rental
Car
Maintained Car Contract
Exchange
Cash
Cash
Receipt
Cash
Customer Cashier
Accept Customer Contact
Find Car & Provide Keys
Assess Customer Needs
Check Out Car
Check Car File & Choose
Assess Insurance Options & Credit Return Car
Fill in Contract
Update Files
Customer Pays
REA – 3-level architecture
38

39. In philosophy and computer science, an ontology is a formal
representation of a set of concepts within a domain and the
relationships between those concepts. It is used to reason about the
properties of that domain, and may be used to define the domain
(Wikipedia).
Resource policy
Type
policy
trigger
specify specify
typifiy Agent Type
participate
Economic
Commitment
reciprocal
specify Event Type policy
fulfill typify
component
typify
Economic Economic responsibility
stockflow fromParticipation Economic
Resource Event
Agent
toParticipation
duality
Resource Event Agent

40. Ontology Summit 2011
Communique
Fundamentally, ontology is about reaching agreements on
what things mean and putting it in machine-processible
form. In an enterprise, this represents a radically different
way to express meaning. The usual way is for meaning
to be scattered throughout the organization in people’s
heads, in email, in no-longer maintained requirements
documents, in conceptual models, etc. … Ontology both
forces and enables an organization to be clear about
what things mean and in doing so, gets everyone on the
same page. Equally important, formally representing
meaning enables automated inference which helps to
reduce unnecessary complexity, improve reliability and
increase agility.

41. Collaboration Space Perspective: Trading Partner vs. Independent
Enterprise #1 Independent view of
Inter-enterprise events
Business
Process
Enterprise #2
Business
Process Business
Process
Business
Enterprise #3
Process Business
Process
Business
Process
Business
Trading Partner view of Process
Inter-enterprise events
Business
(upstream vendors and
Process
downstream customers)
Business
Dotted arrows represent flow of goods, services, and cash between Process
different companies; solid arrows represent flows within companies
SOURCE: Adapted from ISO/IEC 15944, 2007

42. Collaboration Space
Value Exchange
Buyer Seller
Third Party
Japan expert contribution to 15944-4, 9 May 2002, Seoul Korea

43. Accounting Systems Evolution
Principal Enterprise Economic Activities
“ transactional
memory external
to the parties of Economic storytelling Economic storytelling
the exchange” of interoperable
with semantic models of
value creation by firms communities of firms
source
jar memorandum document
Journal
Surrogates notched
A/ Rec ….
. computer Collaboration
stick files and
Sales… Financial Other Space
General
Ledger Reporting Views of
View Enterprise
Event-chains
Ledger . Financial
ooo
statements
Agrarian Age Mercantile Age Industrial Age Enterprise Systems Semantic Web
Age Age

44. Business
workflow Business Process
Event Phases
Economic Economic Business
Resource Agreement governs Process aggregate
Type
typify establish
specifies
specifies
Economic Economic
Commitment specifies Agent Type
reciprocal
Economic
Event Type typify
fulfills
typify
Economic stock-flow Economic from Economic
Resource Event Agent
to
settles duality
materializes
Economic
Claim

45. Independent view of
exchange events
REA
ontology
Trading Partner view of exchanges Trading Partner view of conversions
REA
enterprise
ontology
1. Planning—Identification-Negotiation- (Coase) 1. Planning—Negotiation-Actualization-
Actualization-Post-actualization phases Post-actualization phases
2. inside/outside participate 2. inside only participate
3. inflow/outflow stockFlow 3. use--produce stockFlow
4. 1-to-1, 1-to-n, n-to1, m-to-n duality 4. n-to-1 dualities
5. other 5. other

46. «EconomicResourceType» «EconomicResource» «EconomicEvent» «EconomicResource»
SupplyItemCategory stockFlow Payment
1..1 typify 0..* SupplyItem 0..* 0..* 1..1 Cash
- supplyItemCategoryName PK - quantityOfItemOnThisTicket - remittanceAdvceNum PK - cashAccountNumber PK
- supplyItemTypeNumber PK
- monthlySaleAmountOfSIC - supplyItemPrice receive - $AmountOfRemitAdvice stockflow - cashAccountBalance
- supplyItemQOH- - clientCheckNumber
0..* 0..1
«EconomicAgent» 0..*
BookingAgent
provide
- employeeNumber PK
0..* - bookingAgentCommRate 0..1
0..* 0..*
«BusinessLocation»
«EconomicAgent»
policy Location 1..1 duality
0..* Client
- locationName PK
- clientNumber PK
- locationMapCoords CK site provide 0..*
0..* 1..* - clientName
0..* 0..*
0..* 0..*
0..*
start finish «EconomicEvent»
«EconomicEvent» 1..1
Expedition ExpeditionTicket
«EventType» 1..1 0..* receive
distance
ExpeditionType policy-sequence - expeditionNumber PK PK - ticketNumber PK 0..*
- distanceBetween - slotsFilledForScheduleExped
- expeditionTypeName PK - sequenceOfLocationOnTour - discountedSlotCharge
- actualDuration
- expedExpectedTimeLength meronymic - total$AmountOfSupplyItems
- scheduledExpeditionDate
- standardUndiscountedSlotFee - countOfSlotsOnThisTicket
- expeditionTypeCapacity
typify 0..*
1..1
0..* 0..*
0..*
0..* 0..*
policy participate 0..*
1..* stockflow
policy-count lead participate
«EconomicResourceType»
AircraftType - countOfEmployeeType 0..* 0..*
1..1 participate
0..* 0..*
- aircraftTypeName PK 0..*
- aircraftSeatingCapacity
- aircraftFuelCapacity «EconomicAgent» «EconomicAgent» «EconomicAgent»
0..* Pilot Guide ExpeditionWorker
0..* - employeeNumber PK - employeeNumber PK - employeeNumber PK
- dateOfInitialPilotLicense - dateQualifiedAsAGuide
«EconomicResource»
0..* Aircraft
1..* group 0..*
policy- qualifies group
{incomplete, disjoint} - aircraftEngineNumber PK
«EconomicAgentType» - hoursFlown 0..1 0..1 - dateAircraftManufactured
«EconomicAgentGroup»
EmployeeType - aircraftName CK
People -
«EconomicAgent»
- employeeType PK
- peopleName PK Employee
- startingWageForEmpType
- countOfEmployeesForType - approximatePopulation
- employeeNumber PK
0..1 - employeeName
0..*
1..1
typify
typify 0..*
Typed REA model for exchange business process

47. policyOL
«EventType» -laborMinutesPerUnit «AgentType»
policyTM 1..1 typify
Operation Type Employee Type 0..*
-minutesNeededPerUnit 0..* 0..* 1..* -employeeTypeName PK
-operationTypeName PK
-standardSequence -startingWage
0..* policyBM
1..*
«EconomicResourceType» 0..*
Tool-Machine Type 1..1 «EconomicResourceType»
1..1
-toolMachineTypeDescription PK Medical Equipment Type
-quantityOwned policyBM -medicalEquipmentCatalogNumber PK
typify
1..1 -standardUnitCost
quantityOfRawMaterialPerUnit
1..* -standardGramWeight
1..1 0..*
typify specify -qOH
1..* specify1
0..* 1..1
1..* -scheduledMinutes 1..1
1..1 0..*
0..* 0..* specify specify
«EconomicResourceType» specify
Raw Material Type 0..* -scheduledMinutes 0..*
1..*
-rawMaterialCatalogNumber PK
-standardUnitCost 0..* «EconomicCommitment» «EconomicCommitment»
-qOH Scheduled Manufacturing Operation reciprocal Scheduled Manufacturing Run typify
- scheduledOperationNumber PK - productionOrderNumber PK
1..1
- scheduledSequence - budgetedTotalLaborCost
typify specify 1..* 1..1
- budgetedTotalMaterialCost
-scheduledQuantity - budgetedTotalTool&MachineCost
«EconomicResource» - projectedQuantityProduced
Tool-Machine 1..* 1..1
0..*
-toolMachineNumber PK used
-dateAcquired - quantityUsed fulfill 1..1
0..* 0..*
-totalMinUsedSinceAcquis fulfill
1..* 0..1 participate
0..1 «EconomicResource»
used 0..* Medical Equipment
«EconomicEvent» «EconomicEvent»
- minutesUsed 1..*
Manufacturing Operation Manufacturing Run -medicalEquipTagNumber PK
- manufacturingRunNumber PK 0..1 -actualGramWeight
0..* - initiationTimestamp PK duality
- actualTotalT&MCost produce
«EconomicResource» - actualDuration - toDateRunLaborCost
Raw Material 0..1 0..* 1..1 - toDateRunMaterialCost
consume - actualSequence
-rawMaterialTagNumber PK 1..* - actualQuantityProduced
-dateAcquired
conversion
0..*
participate
-minutes
0..* 0..*
business process
participate
participate 0..* 0..* participate
participate
-minutes
-minutes «EconomicAgent»
0..1 Employee
1..* 0..1
1..* 0..* -employeeNumber PK
-employeeName
«EconomicAgent» «EconomicAgent» «EconomicAgent» «EconomicAgent» «EconomicAgent»
Scheduler Supervisor -wage
Machinist Assembler Electrician -dateHired
-employeeNumber PK -employeeNumber PK -employeeNumber PK -employeeNumber PK -employeeNumber PK
{complete, disjoint}

48. Documentation Systematic Temporal
and and LEGEND
Accuracy and Multidimensionality
Stewardship Efficiency Granular Independent Automated
Reliability and Integration
Comprehensiveness Interoperability Reasoning
Commercial
Imperative Path-Creation
Change
Path-
Creation
Design
Path-Dependent
Change
Changing
Business
Models and
Accounts,
Transaction Expectations
Journals Activity-
and Master (Commercial
and Based
Files (GL) Imperative)
Ledgers Costing
Double-Entry
Accounting
Facet- XBRL
Coded GL
Accounts Innovation:
Narrative Creation of New
descriptions and Artifacts
Digital (Technological
single-entry
Single Imperative)
records
Counting & Entry
Calculating
Methods
Path-
Dependent
Design
Technological
Imperative
SOURCE:
Recording and Hindu-Arabic Computers Advanced Markup Database Semantic Geerts &
Counting Numerals and Tracking Languages Technologies
Technologies. Arithmetic Technologies
Web
Technologies
McCarthy
Advances

49. Documentation Systematic Temporal
and and LEGEND
Accuracy and Multidimensionality
Stewardship Efficiency Granular Independent Automated
Reliability and Integration
Comprehensiveness Interoperability Reasoning
Commercial
Imperative Path-Creation
Change
Path-
Creation
Design
Integrated
Value Chain, Path-Dependent
Business Change
REA REA
Process, and
Accounting Enterprise
WorkFlow
Enterprise Model Ontology
Descriptions
Value
Chain Changing
Business
Integrated Models and
Accounts,
Transaction Repository with Expectations
Journals Activity-
and Master Minimal General (Commercial
and Based
Files (GL) Ledger Imperative)
Ledgers Costing
Double-Entry
Accounting
Facet- XBRL
Coded GL
Accounts Innovation:
Narrative Creation of New
descriptions and Artifacts
Digital (Technological
single-entry
Single Imperative)
records
Counting & Entry
Calculating
Methods
Path-
Dependent
Design
Technological
Imperative
SOURCE:
Recording and Hindu-Arabic Computers Advanced Markup Database Semantic Geerts &
Counting Numerals and Tracking Languages Technologies
Technologies. Arithmetic Technologies
Web
Technologies
McCarthy
Advances

50. Positive REA (study what is)
Enterprise Economic Activities
Economic storytelling Economic storytelling
with semantic models of of interoperable
value creation by firms communities of firms
source
jar memorandum document
notched Journal . computer
stick A/Rec …. files and
Sales… General Financial Other
Ledger Reporting Views of
View Enterprise
Event-chains
Ledger . Financial
statements
ooo
Agrarian Age Mercantile Age Industrial Age Enterprise Semantic Web
Systems Age Age

51. Normative REA (beyond prototypes)
Fully-implemented,
REA-directed,
Accumulation of
enterprise system engineering
expertise &
implementation
experience
Standards work with ebXML,
UN-CEFACT (UMM module)
and ISO Open-edi (accounting
& economic ontology)

52. Hoping for the REA “golden spike” where the
positive (ecologically rational) and the normative
(rationally designed) meet

53. Where are we today in technology?

54. Where are will we be in 15 years?

55. REA monograph – proposed outline
1. The original REA model
a. REAs & accounting ontology
b. the switch to an independent view
2. Granular expansions
a. Up to Value Chains and Value Systems (supply chains) and down to
workflow (state machine)
b. Fit to Theory of the Firm (Coase) – same pattern
i. Exchanges
ii. Conversions
c. The economic component structures of resources (Lancaster) and agents
(need to identify an economic source)
3. Temporal expansions
a. What could be or should be (types, standards, budgets)
b. What is planned or scheduled (commitments and contracts)
c. Business Process phases – Tie workflow to state changes and business
events
4. Needed expansions
a. Claims – tied to Financial Instrument Business Ontology
b. Materialization of account balances
c. Internal controls – Tie to scripts for integrity constraints
5. Future directions and open issues
a. Evaluative (positive)
i. Behavioral
ii. Railway spike (where normative and positive meet in actual
practice)
b. Design (normative)
c. Tie to other accounting work – XBRL-FR and IMA managerial roadmap

56. double-entry
accounting
Enterprise
economic
phenomena
REA-engineered
accounting
systems
An Expanded Vision for Accounting

57. The REA-invention of
Double Entry Any
Bookkeeping: questions
Moving Accounting ??
Back to the Center
of Enterprise
Information
Architectures

58. Documentation Systematic Temporal
and and LEGEND
Accuracy and Multidimensionality
Stewardship Efficiency Granular Independent Automated
Reliability and Integration
Comprehensiveness Interoperability Reasoning
Commercial
Imperative Path-Creation
Change
Path-
Creation
Design
Integrated
Value Chain, Path-Dependent
Business Change
REA REA
Process, and
Accounting Enterprise
WorkFlow
Enterprise Model Ontology
Descriptions
Value
Chain Changing
Business
Integrated Models and
Accounts, Transaction Repository with Expectations
Activity-
Journals and Master Minimal General (Commercial
Based
and Files (GL) Ledger Imperative)
Costing
Double-Entry Ledgers
Accounting
Facet- XBRL
Coded GL
Accounts Innovation:
Narrative Creation of New
descriptions and Artifacts
Digital (Technological
single-entry
Single Imperative)
records
Counting & Entry
Calculating
Methods
Path-
Dependent
Design
Technological
Imperative
SOURCE:
Recording and Hindu-Arabic Computers Advanced Markup Database Semantic Geerts &
Counting Numerals and Tracking Languages Technologies
Technologies. Arithmetic Technologies
Web
Technologies
McCarthy
Advances