Accountant here: Recommend using Beancount with version control on your data so that you can take snapshots at various points in time.
The notion behind "accountants don't user erasers" is that like a blockchain, you're creating a trail of evidence. If all of the data is mutable all of the time, its evidentiary value is low (for example, the IRS gives more weight to "contemporary" evidence than to records constructed or altered after-the-fact).
Another reason to freeze, snapshot, or close your books is to not lose the support and detail behind any financial statements you've produced. Imagine getting a business loan based on your Balance Sheet and Income Statement but later being unable to reconstruct how those were produced.
Generally, accounting systems use a system of cumulative, immutable journal entries. If a mistake is made, then a reversing or adjusting entry is made.¹
There is merit to text based bookkeeping, but don't create a world that is so free form and mutable that it loses it meaning and connection with the real world.
I really enjoy using Beancount + Git for managing the accounting book for my own startup company, but I found it a bit tedious to add entries periodically. I wonder why nobody build a service make it like GitHub but for Beancount and automate lots of stuff. I then decided to make a service for it a while back. Shameless self-promoting here, yesterday I just launched the service in very early stage of open beta:
Basically the idea is, as a software engineer, I believe accounting book can be automated like how we build software. There are many interesting workflow we can bring into the system, such as
- Pull request review
- Commit sign off (pgp signature)
- CI for generating reports
and many other interesting aspects. Also just like software, I believe many of the orgs can benefit from open sourcing their financial data, like no-profits or government. So I am thinking making open source accounting book free repository for the product just like GitHub did previously. Anyway, I just found this thread happen to appear on hacker news so just want to share the stuff I am building. Feedbacks are welcome.
I've considered building something like this as well! I think something cool would be to integrate "predictions" or modeling with this. For example, for people with consistent salaries, this can be used to model financial goals, etc. Thoughts are welcome!
Yeah, so for BeanHub, when you push a commit, the system will capture the accounting book into SQL database. Taking from there, I can imagine there are many data prediction model can be applied to the ingested data. I am also thinking to support "CI job" feature (run a task when you push a new commit), not for building software but for your accounting book. So even if it's not supported by the system officially, it's still possible to build your prediction model.
“Bean counting” has long been an insulting term for what finance professionals and accountants do. Often it’s been used to tar CFOs as transaction processors — a role largely relegated to the back office. What’s more, people like to use the phrase to ratchet up the pedestrian aspects of finance by tagging practitioners as “mere” bean counters or “little more than” bean counters or “simply” bean counters. Such clichés get tossed around a lot.
I'm the solo software developer in my company. I share an office with an industrial automation engineer. Our office is called the nerd office. We embrace the disparaging term.
The notion behind "accountants don't user erasers" is that like a blockchain, you're creating a trail of evidence. If all of the data is mutable all of the time, its evidentiary value is low (for example, the IRS gives more weight to "contemporary" evidence than to records constructed or altered after-the-fact).
Another reason to freeze, snapshot, or close your books is to not lose the support and detail behind any financial statements you've produced. Imagine getting a business loan based on your Balance Sheet and Income Statement but later being unable to reconstruct how those were produced.
Generally, accounting systems use a system of cumulative, immutable journal entries. If a mistake is made, then a reversing or adjusting entry is made.¹
There is merit to text based bookkeeping, but don't create a world that is so free form and mutable that it loses it meaning and connection with the real world.
¹ https://en.wikipedia.org/wiki/Adjusting_entries