Innovative accounting
What contradictions exist in modern accounting? What restrictions are imposed by these contradictions? Is it possible to find an innovative solution for the accounting system, which has existed for more than five centuries and is now widely used in accounting programs?
We tried to answer these questions by describing our financial module, which is called the Basic TMA application. For obvious reasons, we cannot discover the principles of the solution, we reveal only the essence of the solved problem.
Basic TMA Application (BP) is a program for accounting automation, universal for any type and size of business, as well as creating and analyzing financial reports.
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The main consumers of this system are the main financially interested persons, namely, business owners and top management, as well as financiers, whose duty is to compile reports on the state of the business and the results of its activities for these top officials.
For financiers:
For business owners and top management:
To begin with, an elementary basis:
Forget about accounting and turn to matter. Business exists without consideration.
What is business status? - This is what he has.
According to our research, the state can be folded from the following components:
In this case, the owner (s) of the business is an external party, and the business owes it.
The values of these components can be checked "live" at some point in time, and recalculated into the expression of some monetary unit. It turns out the financial condition of the business at the time in money terms.
The same can be done at a later point in time.
The difference between these states will show the business result between these points in time.
On the other hand, the result is calculated as income minus expenses in the same interval between these two points in time.
Condition 2 - Condition1 = Incomes - Expenses
But the state is something physical, it can be “felt”, and incomes and expenses are accounting values.
In this equality lies the balance and connection between accounting and the real world. Business owners and other stakeholders want to know the results of the business and control them. For this, accounting is not needed, a periodic inventory of the entire financial state is sufficient. But in order to answer the question why the results are exactly such, it is necessary to analyze incomes and expenses, and these are already accounting values. In order to have them, you need to keep records.
In addition, having the initial state at a point in time, and taking into account income and expenses after this point, in accounting you can get the estimated financial condition at another point in time.
Condition1 + Revenues - Expenses = Estimated Condition2
Here the most important point is the fact that the estimated financial condition will be similar to the real state only if all income and expenses are correctly accounted for. Thus, the correctness of accounting can be checked in practice in only one way, namely, to periodically check the "live" elements of the financial condition and compare them with the calculated values obtained in the accounting at the same time point.
The main consumers of accounting - business owners and top management intuitively understand this relationship, and trust reports on the results only when they can be checked "live". And it is possible to do this only by comparing the real, proven financial condition at the points in time between which the claimed result is located.
In practice, the following difficulties arise:
There are two contradictions in these decisions:
We managed to find an innovative solution to these contradictions.
Thanks to our technologies, in the base TMA application, accounting is conducted regardless of the accounting currency, financial reports can be presented not only in any currency, but also in any accounting unit, and exchange rate corrections and revaluations are not introduced by additional charges, but are taken into account within the system itself.
In the traditional accounting system there are many other contradictions. On the one hand, they make it possible to solve certain problems, on the other hand, they make the accounting system difficult and understandable only to specially trained people.
Developing an innovative accounting system, on the basis of which the basic TMA application was created, we went beyond the scope of accounting science and used the knowledge of other areas, for example, relational databases, programming and mathematics. We solved most of the contradictions, and made the accounting system understandable to anyone even without special financial education.
The system uses only four accounts - no more, no less:
Based on the principle of double entry between four accounts, only 16 transactions are possible:
The algorithms of the built-in accounting system are much more complicated, but in practice the user operates only with these 16 movements.
Thus, any financial business transaction occurring in a business can be attributed only to one of the 16 transactions. It's simple! Double entry is not defined as a record in two accounts for one debit and another credit. Any operation is a movement. From one account to another. In one account it decreases, in another it arrives.
Visually, this can be shown as follows.
In fact, these four accounts are tables that contain all the information about the financial condition and results of operations. All that is needed to make a triad of reports.
Analytical sections were made into interrelated directories, each of which is connected to one of the four main accounts on the one hand and forms the structure of one of the three financial reports on the other.
The basic TMA application was created in the tmaplatform development environment. In it, as a report generator, there is a tool that we call TMA Analysis. The main feature of this report generator is that it is aimed at working with data in time. On the X axis, the time scale is always measured by periods: day, week, month, etc. On the Y axis, reports are articles (in the vertical format, in the horizontal format - vice versa). The second valuable feature of TMA analysis is the fact that all report forms are created without the participation of programmers, whose task is usually to write database queries correctly. After a little training, any person will be able to create various forms of reports using TMA Analysis.
It is in TMA Analysis that a triad of financial statements is created. It takes 30 - 45 minutes for a moderately trained person to create a triad report form. Any figure in the report can be detailed both in the context of existing analytical articles from reference books, and by movements with the ability to see each operation separately. Thus, any number in the report will not remain unanswered where it came from.
In itself, its use is possible only in personal records, which is what many of our friends and employees do. As primary documents, 16 basic documents are directly used, which are simple postings with little additional functionality, or auto-charging. You can also create your primary documents in the platform environment, which takes a few minutes.
But in essence, the Basic TMA application is the core of bookkeeping. It is only necessary to integrate with various kinds of primary electronic documents and reference books, and it does not matter what system they are in. In Excel, 1C, MS Dynamics, SAP or any other programs and databases. This approach allows us not to replace the operating automation systems already operating in the enterprise. Only the logic and algorithm of creating a triad of financial reports and directly the very reproduction and analysis of these reports are replaced.
As for the realities of the current situation, official accounting will be kept for a long time in the old manner, as defined by the rules, and well. But business owners and top management can already receive from the account better, reliable and understandable information for making strategic and managerial decisions. In addition, the International Financial Reporting Rules dictate the principles of presenting information, but not the rules for its recording, storage and processing to obtain the resulting values. Thus, this e-bookkeeping system can also be used to prepare a triad of financial statements in the format of IFRS and other GAAPs, but for us this is not important, since we do not consider these principles to be simple and easily understood for business owners and top management.
BP3 Entry and structural reference analyst
Master class on TMA Analysis
State entry and correction, initial balances, basic documents
We tried to answer these questions by describing our financial module, which is called the Basic TMA application. For obvious reasons, we cannot discover the principles of the solution, we reveal only the essence of the solved problem.
Basic TMA Application (BP) is a program for accounting automation, universal for any type and size of business, as well as creating and analyzing financial reports.
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The following properties of this product are exceptional:
- The process of accounting and compiling a triad of financial reports is fully automated.
- There is no reference to accounting for a single accounting (reference) currency, since the system keeps records in physical terms of accounting units, while the data in the accounting are balanced.
- Exchange rate corrections and revaluations are taken into account by the system itself, i.e. no additional charges need to be made when currency rates change and values of values and debts change.
- The triad of reports is represented by the system in any requested currency, while exchange rate corrections and revaluations in the reports correspond to this currency as the account currency.
- The period in the triad of reports can be expressed not only by calendar periods, but also by a certain number of days, which makes it possible to have data of reports that are suitable for analysis in real-time, if financial-economic operations are also recorded in real-time.
- All the data in the triad of reports are scaled by the available analytical sections, are decomposed into a list of financial and business operations by which they are formed, and further to a single primary operation.
- Ease of understanding all the processes occurring in the system.
The main consumers of this system are the main financially interested persons, namely, business owners and top management, as well as financiers, whose duty is to compile reports on the state of the business and the results of its activities for these top officials.
What value to consumers carry the exceptional properties of the proposed product?
For financiers:
- Usually, the preparation of a triad of financial statements after the end of the established calendar reporting period takes a lot of time and effort. The proposed system allows you to spend all this time and effort not on data collection and reporting, but on their in-depth analysis. That will significantly improve the quality of the information they provide "up".
- The system does not require registration of any additional conditional operations, only the initial primary financial business operations. The financier needs only to determine how this or that operation affects the financial condition and results of operations in a very clear coordinate system, and for which analytical sections the operation goes.
- At any given time, financiers can answer the question “from above” from where this or that figure came from. This provides unprecedented confidence in the results of the work of such a financier.
- The data in the system is structured in a simple and understandable to a non-specialist coordinate system, which will provide a greater understanding “from above” of the conclusions that the financier will draw from financial analysis.
- There is no need to simplify the accounting to go to the monetary basis. It is possible to fully and equally and even use mirror-image both, and the economic basis (by accrual) and the monetary one.
For business owners and top management:
- Finally, accounting has become simple and understandable for the average person.
- Finally, it became possible to “keep a finger on the pulse” and make decisions not on scraps of information, but on the basis of a holistic picture of financial status and results of operations.
- Real-time business monitoring can be achieved.
How it works?
To begin with, an elementary basis:
Forget about accounting and turn to matter. Business exists without consideration.
What is business status? - This is what he has.
According to our research, the state can be folded from the following components:
- Money
- Values
- Debts to us minus our debts
In this case, the owner (s) of the business is an external party, and the business owes it.
The values of these components can be checked "live" at some point in time, and recalculated into the expression of some monetary unit. It turns out the financial condition of the business at the time in money terms.
The same can be done at a later point in time.
The difference between these states will show the business result between these points in time.
On the other hand, the result is calculated as income minus expenses in the same interval between these two points in time.
Condition 2 - Condition1 = Incomes - Expenses
But the state is something physical, it can be “felt”, and incomes and expenses are accounting values.
In this equality lies the balance and connection between accounting and the real world. Business owners and other stakeholders want to know the results of the business and control them. For this, accounting is not needed, a periodic inventory of the entire financial state is sufficient. But in order to answer the question why the results are exactly such, it is necessary to analyze incomes and expenses, and these are already accounting values. In order to have them, you need to keep records.
In addition, having the initial state at a point in time, and taking into account income and expenses after this point, in accounting you can get the estimated financial condition at another point in time.
Condition1 + Revenues - Expenses = Estimated Condition2
Here the most important point is the fact that the estimated financial condition will be similar to the real state only if all income and expenses are correctly accounted for. Thus, the correctness of accounting can be checked in practice in only one way, namely, to periodically check the "live" elements of the financial condition and compare them with the calculated values obtained in the accounting at the same time point.
The main consumers of accounting - business owners and top management intuitively understand this relationship, and trust reports on the results only when they can be checked "live". And it is possible to do this only by comparing the real, proven financial condition at the points in time between which the claimed result is located.
In practice, the following difficulties arise:
- Maintain equality: State2 - State1 = Incomes - Expenses
To solve this problem five centuries ago, humanity came to a method called double entry. A unique and simple way that allows you to maintain this equality in accounting all the time. With its application, it remains only to periodically compare the estimated state with the real one (inventory), and the accounting data for income and expenses can be trusted. That is why this principle is fundamental in the modern world. - Ensure that the estimated state corresponds to the real one.
This problem should be divided into two components:- Achieve accounting for all real income and expenses. This problem most likely concerns the accuracy of accounting and does not have a systemic solution.
- Accounting for changes in the value of state elements. When changing the value of individual elements of a state over time, the necessary equality is violated, even if all income and expenses are carefully taken into account. This problem arises from the method of solving the first practical difficulty - respect for balance in accounting. The fact is that, according to the principle of double entry, records are kept in the expression of a single accounting (reference) monetary unit. In practice, this problem is solved by assigning changes in the value of the elements of the state to income or expense. In other words - accrual of exchange and sum amendments and revaluations.
There are two contradictions in these decisions:
- We solve the problem of balancing accounting with double entry, but at the same time we get the second described problem.
- Solving the second problem by assigning changes in the value of the elements of the state to income and expenses, we cannot keep in account constantly calculated financial condition that would correspond to the real, but only at certain points in time. Usually this is the end of the reporting period, when it is customary to charge all exchange rate, sum amendments and revaluations.
We managed to find an innovative solution to these contradictions.
Thanks to our technologies, in the base TMA application, accounting is conducted regardless of the accounting currency, financial reports can be presented not only in any currency, but also in any accounting unit, and exchange rate corrections and revaluations are not introduced by additional charges, but are taken into account within the system itself.
In the traditional accounting system there are many other contradictions. On the one hand, they make it possible to solve certain problems, on the other hand, they make the accounting system difficult and understandable only to specially trained people.
Developing an innovative accounting system, on the basis of which the basic TMA application was created, we went beyond the scope of accounting science and used the knowledge of other areas, for example, relational databases, programming and mathematics. We solved most of the contradictions, and made the accounting system understandable to anyone even without special financial education.
The system uses only four accounts - no more, no less:
- Money
- Values
- Debts
- Lesion
Based on the principle of double entry between four accounts, only 16 transactions are possible:
- Plus money minus money
- Plus money minus values
- Plus money minus debts
- Plus money minus loss
- Plus values minus values
- Plus values minus money
- Plus values minus debts
- Plus values minus loss
- Plus debts minus debts
- Plus debts minus money
- Plus debts minus values
- Plus debts minus loss
- Plus loss minus loss
- Plus loss minus money
- Plus loss minus values
- Plus a loss minus debts
The algorithms of the built-in accounting system are much more complicated, but in practice the user operates only with these 16 movements.
Thus, any financial business transaction occurring in a business can be attributed only to one of the 16 transactions. It's simple! Double entry is not defined as a record in two accounts for one debit and another credit. Any operation is a movement. From one account to another. In one account it decreases, in another it arrives.
Visually, this can be shown as follows.
In fact, these four accounts are tables that contain all the information about the financial condition and results of operations. All that is needed to make a triad of reports.
Analytical sections were made into interrelated directories, each of which is connected to one of the four main accounts on the one hand and forms the structure of one of the three financial reports on the other.
The basic TMA application was created in the tmaplatform development environment. In it, as a report generator, there is a tool that we call TMA Analysis. The main feature of this report generator is that it is aimed at working with data in time. On the X axis, the time scale is always measured by periods: day, week, month, etc. On the Y axis, reports are articles (in the vertical format, in the horizontal format - vice versa). The second valuable feature of TMA analysis is the fact that all report forms are created without the participation of programmers, whose task is usually to write database queries correctly. After a little training, any person will be able to create various forms of reports using TMA Analysis.
It is in TMA Analysis that a triad of financial statements is created. It takes 30 - 45 minutes for a moderately trained person to create a triad report form. Any figure in the report can be detailed both in the context of existing analytical articles from reference books, and by movements with the ability to see each operation separately. Thus, any number in the report will not remain unanswered where it came from.
How to use the Basic TMA application?
In itself, its use is possible only in personal records, which is what many of our friends and employees do. As primary documents, 16 basic documents are directly used, which are simple postings with little additional functionality, or auto-charging. You can also create your primary documents in the platform environment, which takes a few minutes.
But in essence, the Basic TMA application is the core of bookkeeping. It is only necessary to integrate with various kinds of primary electronic documents and reference books, and it does not matter what system they are in. In Excel, 1C, MS Dynamics, SAP or any other programs and databases. This approach allows us not to replace the operating automation systems already operating in the enterprise. Only the logic and algorithm of creating a triad of financial reports and directly the very reproduction and analysis of these reports are replaced.
As for the realities of the current situation, official accounting will be kept for a long time in the old manner, as defined by the rules, and well. But business owners and top management can already receive from the account better, reliable and understandable information for making strategic and managerial decisions. In addition, the International Financial Reporting Rules dictate the principles of presenting information, but not the rules for its recording, storage and processing to obtain the resulting values. Thus, this e-bookkeeping system can also be used to prepare a triad of financial statements in the format of IFRS and other GAAPs, but for us this is not important, since we do not consider these principles to be simple and easily understood for business owners and top management.
Video
BP3 Entry and structural reference analyst
Master class on TMA Analysis
State entry and correction, initial balances, basic documents
Source: https://habr.com/ru/post/132631/
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