General Ledgerism - Financial Deregulation petition

Archive Notice: This page preserves the original work of Todd Boyle on general ledger architecture and distributed accounting (1997-2010), restored 2026 by The Ledgerism Brief. We are not affiliated with any accounting standards body. Original work © Todd Boyle. Visit The Ledgerism Brief for current editorial coverage of CPA practice, audit, M&A quality of earnings, and digital asset accounting.

We petition the AICPA, SEC, and U.S. Congress to change the laws governing financial disclosure and reporting by publicly listed companies as follows:

A. REMOVAL OF BARRIERS BLOCKING ACCESS TO INFORMATION.

Insiders should not have better information than stockholders.

1. WEB ACCESS: publicly listed companies should be required to maintain interactive, electronic interfaces available to the public providing all of today's required interim and annual financial statements and SEC reports. This website should be required to provide drilldown into details whenever such details or links exist, to support a reported fact. This website should provide appropriate navigation, search, and query tools.

2. MACHINE READABLE: Information should be published through machine-readable interfaces, as well as human-readable interfaces. Electronic interfaces (i.e. functions, methods, APIs) should provide all of the drilldown, navigation, search and query capability required under the law (1) above.

3. STANDARDS-BASED TECHNOLOGY: interfaces should be compliant with vendor-neutral standards for protocols, syntax, and semantics. To qualify as a "Standard" under this law, would require minimum levels of transparency, vendor-neutrality, and governance of the Standards Organization that publishes the technology standard.

4. GREATER DETAIL IN DISCLOSURE: the scope of information required should be expanded to include breakdowns of the numbers reported in audited financial statements into reasonable and meaningful details. Each of those meaningful breakdowns should be further decomposed to disclose individual transactions larger than a material threshhold such as $10,000.

5. GREATER TIMELINESS OF DISCLOSURE: the scope of information should, furthermore, be expanded to include *all* completed transaction data (including unaudited information) available in the accounting and information systems of the company more than 24 hours old. Transaction data includes orders, invoices, etc. together with any details of the surrounding contract or terms of trade necessary for understanding the transaction entry.

6. LEVELS OF ACCESS: the level of detail to be provided in these new disclosures should be proportionate to the percentage of ownership plus long term debt held by the requestor of information, and should reach 100 percent of accounting detail for every holder of greater than 3% of the company or $1 million in equity+long term debt, whichever is less.

7. ACCOUNTABILITY: this proposal would require new categories of interim, unaudited accounting information. New standards should be established to provide reasonable but not excessive, reliability and accountability for this new, interim, unaudited accounting information.

B. DIGITAL EVIDENCE OF MATERIAL CONTRACTS BY PUBLICLY LISTED COMPANIES

1. DIGITAL SIGNATURE BY BOTH PARTIES: No sale, purchase or other transaction or contract involving any publicly listed company should be enforceable by the courts in the U.S. or its states, unless that contract is digitally signed by both parties to the contract and if material, maintained for inspection by Owners within the disclosure system in (B) above.

2. MATERIALITY: This provision should apply to contracts, sales, trades etc above a material threshhold such as $10,000.

This provision would require agreement upon minimum standards for electronic trade and settlement. The costs of implementation would be recovered by reductions in downstream bookkeeping, accounting, and settlement that follow from decisions to buy or sell. Everything after that point determined by contract, would become increasingly automated after any standard is established, benefiting individuals and small companies as well as Enterprise.

C. DEREGULATION OF THE ACCOUNTING INDUSTRY (ENDING OF PROTECTED MONOPOLY)

The public accounting industry has continually grown less competitive, more inefficient, and more costly since the 1930s when mandatory audits began. The industry has effectively maintained barriers to entry or competition, and effectively dictated the kinds of information included in financial reports in a self-serving manner. In 1930s local data did not exist and CPAs added an enormous additional value. Today, local information is abundant, and CPAs only limit and modulate the disclosure of that data.

The entire regulatory burden and reporting standards applied to the largest companies (Big GAAP) is applied to every small CPA and business in the country, and enforced by state regulators. This is an economic injustice to smaller businesses and individuals.

All of these phenomena are relics of an earlier age. Financial information is just like any other information, and government involvement in the information process is destructive and counterproductive.

1. Licensing requirements for CPAs should be removed.

2. Owners and investors should freely choose, within a free market, their financial information provider based on objective quality, reputation, and the quality and methodology they apply to financial reports. Providers highly skilled in data management would be allowed to publish financial statements.

3. Definitions of terms used in financial statements (GAAP) should be determined solely by Owners and investors, as a matter of contract with their reporting providers or with officers and management. Government enforcement of GAAP terminology promulgated by private, unelected groups of CPAs, should end. Alternative definitions of GAAP should be encouraged, and Owners and investors should take responsibility for understanding them.

4. Software agents and robots should be granted equal rights to the provision of audit and accounting services as human CPAs. Discrimination against robots or software agent audits, failure of management to provide requested information or other obstruction of their function should be prohibited.

Todd Boyle
23 jan 2002 updated 3 Feb 2003

In November 1999, the IASC Staff published a discussion paper, Business Reporting on the Internet. The discussion paper was authored by four academics, two from a university in Singapore, one from the UK and one from the USA. http://www.iasc.org.uk/cmt/ Although this paper, and all papers by Accountancy standards bodies and regulators, argued for stronger codes of conduct, it provides an encyclopedic report on the abuses within today's false reporting system.

The Canadian Institute of Chartered Accountants has published a similar study, and the Auditing & Assurance Standards Board of the Australian Accounting Research Foundation has published an auditing guidance statement on the subject, but these are not available on line.

In the late 18th century the words of an American lawyer, Patrick Henry, helped persuade Congress to pass legislation protecting the public's right to know. "The liberties of a people never were, nor ever will be, secure, when the transactions of their rulers may be concealed from them."