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Dennis Howlett

How then do you handle the rule changes? Presumably by altering whatever the rule is in the appropriate place. But how is this fundamentally different to what already happens? Is this about meta data?


In short - back-end instead of up front, or rather presentation instead of representation like this:

Current ways: The transaction is added to the system at the appropriate account, up front. Slotted into a specific "drawer". That's the only place the system "knows" about the transaction, represented by an invoice or some bill-of-something. With a rule change you would have to reapply the transaction to another account or at another time, but in most cases you would have to pay C&L to translate the accounts into a different GAAP (or rule).
(I've done it, preparing for US GAAP, precious three years, months of work and oozes of cash paid for nothing).

If you'd like to run in parallel US and UK GAAP every invoice (or other transaction-representation) would be under the risk of having to be registered into two different accounts (and even parallel systems) up front due to the different rules.

Alternative: The system has the raw data from the actual happenings, from the workflow itself, it knows when the widget changed colour, when it changed owner, when it left our warehouse. All of that workflow results captured, no accounting thinking nor transactions involved. Mind you that a "transaction" is mostly a virtual activity, something defined by a rule. The widget does not bother about ownership, although it does bother about where it is.

For that, at the back end you could have a "template" as in a query plus presentation giving an accounting report. That "template" has it's own logic and applies that to the raw data when queering: "Add up value of all widgets that left our ownership during period A". That'll give the sum of transactions "sales of widgets for period A" according to Rule 1.

Now add another template with a different query using same untouched raw data: "Add up value of all widgets that left our ownership, and that left our premises during period A". That'll give "sales of widgets" following Rule 2.

The two reports (queries) thus yields two different results, each following a different rule (or GAAP) without influencing each other. And they can be run in parallel. Add another GAAP (Rule 3) later down the road, once the "Rule 3 templates" have been defined, using the same old raw data it'll yield all historical and current accounts according to Rule 3.

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