This is as good a place as any to mention that this double-entry bookkeeping process, a centuries-old methodology, is long overdue for replacement (but changing a global standard like this may never come to pass). In the early 1980s, an academic known as William McCarthy presented one such alternative known as REA, which organizes accounting into a resources-events-agents model. A little while ago, I asked Mr. McCarthy whether REA was dead and he claimed that it in fact wasn't dead and that work was still ongoing.
The thing is, since as early as the 1960s, there has been discussion and publications about event-driven accounting architecture. Pretty crazy, right?
Alas, considering IFRS and GAAP span the world's modern economies, it may be safe to assume that hell will freeze over before any viable accounting alternative to double-entry bookkeeping supplants it.
I don't think double-entry is going anywhere, but guidance certainly is. I pay a lot of attention to this stuff, specifically the convergence of financial accounting guidance. It's not happening at a blistering pace, but things are moving. More and more US companies are reporting under IFRS. FASB and IASB have both done a lot of rewriting in the past 5 years, which is aligning GAAP and IFRS.
APAC is really churning. Japan GAAP takes more hints from US GAAP, but many Japanese companies have opted for IFRS. Australia GAAP has some very strange principles, especially around equity compensation, but is beginning to align with IFRS. China, well, I don't
really know, but I'm definitely on the lookout for it...
I think it's one of the most interesting of uninteresting things.
I doubt double-entry book keeping will be replaced but there are many opportunities to build on it. GAAP earnings can give you results that are completely out of sync with whether a business is making it's owners richer or not which is what counts at the end of the day.
The thing is, since as early as the 1960s, there has been discussion and publications about event-driven accounting architecture. Pretty crazy, right?
Alas, considering IFRS and GAAP span the world's modern economies, it may be safe to assume that hell will freeze over before any viable accounting alternative to double-entry bookkeeping supplants it.