My Report to Dr. Bill McCarthy on REA Progress

Last week I was invited to be a guest lecturer to Dr. William E. McCarthy’s Michigan State University graduate students.

As noted in my textbook, Balancing Act: A Practical Approach to Business Event Based Insights, in 2002 “I took a day during my family vacation to visit my alma mater, Brigham Young University. I started by looking up an article a professor had introduced me to, by W. E. McCarthy, Ph.D. in July 1982 The Accounting Review entitled ‘The REA Accounting Model: A Generalized Framework for Accounting Systems in a Shared Data Environment.’1 I spent the day reflecting on what I really understood of the topic, and what insights I could add.”

>>> Related Post: The REA Big Idea-Eliminate Posting <<<

So in my lecture, I chose to report on what I had learned about the subject, and how I had made application of it in my work and for my clients.

I have made the slides available here and under the white paper section of by blog here. They are quite readable, so I am not going to copy the material here. But here is a list of items discussed in the lecture, along with the slide number, and the timing in the video where it is discussed. The timing is clickable in the comment section of the video, and

Introduction and Transactions vs. Balances

-Agenda Review 3:30, slide 2
-Self Introduction 5:14, slide 3
-Study History – Computer growth over 50 years. 6:52, slide 4
-Transactions vs. Balances in Analytical Processes 9:00, slide 5
-Posting Key Decision 12:44, slide 6

The Daily Financial Cycle

-The Daily Financial Cycle Part 1 14:47, slides 7 – 9
-Historical Computer Systems Videos 18:19
-The Daily Financial Cycle Part 2 20:25, slides 10 – 11
-Minimum Cost for Maintenance of Financial Data 30:00, slides 12-17

Sample Application Technoligies

-IBM’s Scalable Architecture for Financial Reporting (SAFR) 36:54, slides 19-20
-Svayam Infoware’s Financial Period End Management (FPEM) Application 40:05, slides 21- 24

-Foundational Universal Ledger Concept 42:48
-Your personal ledger 44:33. slides 26-27
-Cost of Blockchain Security 48:19
-Self Funding Approach 51:49, slides 28-29
-Share a ledger objective and mockups 54:26, slides 30-37
-REA use in Share a ledger 58:04, slides 38-49

Questions and Perspectives

-Transactions vs. Balances 1:06:32
-Eric Denna Healthcare data 1:09:02
-Graham Gal on Data Origins and Blockchain Search 1:13:41
-Rick Roth on applicability of REA 1:17:40
-Rakesh Kant question to Eric on Healthcare Data 1:21:57
-Bill McCarthy and Bob Haugen and update on REA 1:29:25

My predictions for the future 1:31:24, slide 51

This is Episode 207 of Conversations with Kip, the start of five years of continuous production, the best financial system vlog there is. Literally learn more–about ledgers and financial systems–at

Watch all episodes in order at the Conversation with Kip Playlist

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