Conference Paper (2014): Real-Time Integrated Accounting Architecture

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Real-Time Integrated Accounting Architecture

In 2014, we presented a real-time integrated accounting and cost architecture based on a unified data model and parametric engine.

The system had already been in live production usage since 2011.

This early work outlines a model where:

- financial and cost accounting operate in a single structure
- accounting entries are generated algorithmically
- reporting is derived directly from data

We are sharing this as an early academic reference to the architecture.

Core concepts:

Unified Ledger / Parametric Engine / Real-Time Integration / single data structure / integrated cost accounting / real-time reporting

V. European Conference on Social and Behavioral Sciences
September, 2014
PaperID-883 İASSR İASSR Archive

Conference Paper:

Fuzzy Logıc Accountıng System Operatıng Instantly-ıntegratedly Wıthın The Framework Of Accounts Chart Level And The Solutıons For Instant-ıntegrated Cost Accountıng

Ali İhsan Bayır

Introduction

Topic of the project is to develop a software that is capable of accounting the activities of a business entity as instant and integrated within the framework of account charts. All of the data entered by the user will be interpreted by the software and will be accounted as instant and integrated within the framework of account charts. Accounting records will be made partially using fuzzy logic according to defined parameters. Records of cost accounting will also be made by the software in an instant and integrated way. The software will offer the user, who has the knowledge of computer and accounting at the basic level, an advance level accounting record system and will allow him/her to report the entries. The research includes innovation the knowledge of theoretical accounting and solution of accounting in the computer systems. R & D activities of the topic of project was supported by TUBITAK (The Scientific and Technological Research Council of Turkey).

When the development process of computerized accounting practices is examined, it is seen that a software was developed under the supervision of an accounting expert. This process becomes actualized in a way that an expert on accounting tells the accounting processes, which are manually recorded, to the software developer and the software developer transforms what are told into a program. The most important problem in this process is the fact that software developer does not know accounting and transforms the processes told to him/her literally into a software. Therefore, computer technologies and their facilities pertaining to accounting transactions are not sufficiently employed in the softwares.

Science of accounting produced a series of processes and methods in order to inspect and control te manually-performed accounting processes. These proceses and methods are necessary for ensuring the control of manually recorded accounting datas/results and obtaining certain facilities. For example, records of ledger (book of final entry) save you from examining journal entries individually in the need of receiving a report or asking balance at any time.

As seen in the example above, some processes and operations in the science of accounting are not the essential task of accounting and they are indeed produced from necessitiy. When the facilities of computer are wholly employed and when the software and data-base architectures are shaped in accordance with the science of accounting, these tasks and processes will not be needed. For example, it will not be needed for separate data to be recorded in the correctly- shaped database structure for the ledger records. It will be possible for the records of ledger to be procured with a slight DB inquiry.

The event told above is just an example. This and many issues similar to this are points to be solved with sofware and database architecture. Therefore, softwares for accounting should be shaped at the beginning in accordance with the essence of the science of accounting.

When the tenet of theoretical accounting is examined, it has also been shaped in compliance with the manual accounting continuums. Accounting is taught on the basis of manually-recorded accounting processes. Another significant subject is, on the other hand, cost accounting. Theoretical tenet deals with cost accounting separately from general accounting. That being the case, it becomes impossible for current-term effects of cost accounting transactions and records to be seen on general accounting (such as trial balance report). Whereas, cost accounting is not a separate field of science, but is a part of science of accounting. This hypothesis, put forward in the project, envisages that cost accounting can be run nestedly, simultaneously and instantly.

This approach, which is impossible according to theoretical tenet, was tried to be solved through software and database architecture within the scope of the project. Fuzzy logic methods were applied in the Cost Calculations.

This approach, which is an important problem according to the hypothesis put forward in the project and which will positively affect the accounting success and productivity, will be able to be solved by the fact that computer-software technologies are structured according to the essence of sicence of accounting. While this kind of solution is an innovation for computerized accounting softwares, it is also a new perspective and solution for the science of accounting.

Starting from this and similar findings, topic of the project is based on the fact that any accountant (at the same time, practitioner of accounting) learns sofware and database and s/he structures the processes of softwaredatabase design according to the essence of sicence of accounting.

Hypothesis:

- When software and database architecture is structured in accordance with the basic logic of sicence of accounting, there will be no need for most of the manually-recorded processes to be turned into software. This process and reports will be available thanks to an inquiry of DB when they are needed.

- With an accounting algorithm that can be modelled in accordance with the establishment through parameters, the basic datas of establishment entered by the user can be accounted by the software instantly and integratedly to accounts chart. Thus, instant reports can be obtained, and the user having the basic knowkedge of computer and accounting is offred an advanced accounting system and reporting. This solution will contribute also to the accounting control.

- Cost accounting can be run instantly and nestedly with the general accounting. Hence, the effect of cost accounting on the general accounting can be observed (in the reports such as trial balance) instantly in the current term (on the basis of standard costs).

- In cost calculations, unit cost and capacity utilizations are recounted in compliance with the costs that occur at the end of the term by partially using fuzzy logic approaches, and they will be recorded for accountancy. All these treatments which require advanced level of knowledge will be carried out by the software.

Methods

Literature review: The publications related to accounting were investigated, and the solutions and approaches with respect to the problem within the scope of project were examined. Commercial programs and open source projects were analyzed both as software and as database. While in this research, various fuzzy logic studies are observed in computerized calculations, no approach was found which radically deals the science of accounting with computer technologies. Again, in a similar way, no investigation was discovered regarding instant-integrated cost accounting, which is the most important hypothesis of the project.

Development of the Hyptohesis: In terms of the solution of problem that was put forth within the scope of project, a new solution was set forth in the science of accounting by considering the computer technologies. According to the hypothesis, an accounting system running instantly-integratedly within accounts chart level, and instant and integrated solution of accounting within general accounting were envisaged. Hypothesis were formed within the framework of the predictions.

Development of the Algorithm: In order for the questions put forth to be solved and for the hypothesis to be corrected, the assumptions in the theoretical tenet and the methods in the computerized accounting were disregarded. Hence, the hypothesis was developed on the bases of science of accounting, independently from the assumptions, rules and facts. Accounting processes and transactions were dealt with according to this new approach, starting from the most basic one. The solutions and methods discovered were transformed into algorithm that would form a basis for software. This algorithm will underlie the software and database architecture.

Scientific verification test of Algorithm: The algorithm derived was theoretically subjected to verification tests on the basis of method and operation. Thus, logical verification of the theory was made. This activity of verification showed that the solutions predicted in the theory are achievable and verifiable.

Developing design and software: Software and database architecture of the algorithm, whose logical verification was made, was designed. The design process of software and database was propounded predicating on the fundamental accounting logic. Buffer processes put forth as a natural result of accounting activities carried out manually in the traditional approach were disregarded, and a new model was built totally on the basis of accounting logic and computer technologies. The algorithm was re-handled and improved at some stages of software developing activities. The prototype derived at the each stage of software developing process was subjected to operation, calculation, accounting record tests, and the algorithm was technologically verified.

Applied tests of the software: The obtained prototype was subjected to applied tests and its success of ensuring the results predicted in the hypothesis was analyzed. These tests are formed of three parts. The first part is the improving tests that also contain operation, calculation and software errors made by us. Substantial part of these tests was made with management data. The second part of tests was made with real and full-time data from the subject managements. This work also covers the user’s tests. The third part of tests is, on the other hand, the controls in which the success of software in operation, calculation, record of accounting and reporting is analyzed by expert accountants. The tests revealed that the desired results were obtained.

Outputs

- The hypotheses producing a new perspective and solution for the science of accounting and for computerized accounting softwares.

- The algorithm developed based on these hypotheses.

- The prototype derived thanks to the transformation of the algorithm into software.

- Verification of the hypotheses (theory).

- Innovative solutions in the science of accounting.

- Other solutions obtained thanks to software and database architecture, innovations and buffer outputs.

Result

In the project, application of science of accounting was re-handled within the frame- work computer and software technologies. Instantintegrated operability of accounting was suggested on the backbone of accounts chart with the computer facilities. It was proved that cost accounting can be run instantly-integratedly on the accounts chart level.

The approach of instant-integrated cost accounting discussed within the project and the use of fuzzy logic solutions employed in cost calculations produce better results in unit cost calculations. According to actual state, the developed algorithm calculates the capacity values used practically considering actual expenses, the actual production and actual changes of inventory and calculates the actual unit cost on these new values. It can instantly report the results at accounts chart level.

The developed algorithm employs standard cost method during the term, on the other hand, at the end of the term it can re-calculate all of the data on the basis of de facto (actual) costs. This calculation is more meaningful in the situations in which plenty of products are produced with different capacities and various costs at the same production route. The algorithm of cost accounting was developed based on the assumption of limitless route and limitless product index. Thus, there is no need for it to be re-handled for each sector or each management.

The project re-handled accounting with a different point of view by using computer and software technologies, and it can test the hypotheses it put forth successfully. Contributions of the theories, derived at this stage, to science of accounting and accounting users should be handled with new ideas developed and with different studies.

In this paper, basic assumptions of the project and the results obtained were dealt with in general.