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The future of accounting is semantic spreadsheets

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Charles Hoffman, a trailblazer in the field of accounting, has been at the forefront of technological change since the early days of digital transformation. In a recent conversation, Hoffman shared his journey and vision for the future of accounting and auditing, highlighting how the industry is poised for a major shift toward machine-understandable artifacts and semantic knowledge graphs.

Hoffman’s career began in 1982 as an auditor with Price Waterhouse. “Back then, everything was paper based,” he recalled. “But within three months, I was already moving those same working papers and schedules into VisiCalc and then Lotus 1-2-3. I would create them electronically, print them out, and tape them into the audit bundles.” The introduction of the Compaq luggable computer, he noted, made electronic spreadsheets even more compelling.

Fast forward to today. Hoffman points out that while accounting and audit documentation is now 100% digital, it still mirrors its paper origins in fundamental ways. “Most working papers are just digital proxies — Excel spreadsheets, Word documents, PDFs and sometimes HTML. They’re presentation-oriented and not truly understandable by machine-based processes,” he explained.

What are semantic spreadsheets?

A semantic spreadsheet is a revolutionary advancement that combines the familiar structure of a traditional spreadsheet with the power of semantic technology. Unlike conventional spreadsheets, where the data is presented as isolated cells and rows, semantic spreadsheets encode meaning and context directly into the data.

How semantic spreadsheets work

Each cell in a semantic spreadsheet carries metadata that describes the data it contains, such as its type, relationships to other data, and its role within a broader framework. For instance, a cell containing “$1,000” would not only indicate the amount but also specify that it represents “Revenue,” linked to a specific period and financial statement.

Data in semantic spreadsheets is interconnected, forming a graph of relationships rather than isolated rows and columns. This structure mirrors how data is understood in databases and knowledge graphs.

The metadata and relationships are encoded in a machine-readable format, such as XBRL, RDF or JSON-LD. This allows software to understand and process the data intelligently, enabling automation, validation and advanced analytics.

Benefits of semantic spreadsheets

Data from a semantic spreadsheet can seamlessly integrate with other systems, such as databases or ERP systems, without the need for manual reformatting or interpretation. By embedding meaning and rules, semantic spreadsheets can automatically flag inconsistencies or errors in the data, reducing the risk of human error.

Semantic spreadsheets enable advanced querying and analysis. Users can ask complex questions like: “Show me all revenue entries over $10,000 linked to product sales in Q1,” and get immediate answers. Every entry in a semantic spreadsheet is linked to its origin and context, creating a transparent and traceable audit trail.

Imagine an accounting firm using a semantic spreadsheet to prepare a financial report. Instead of manually consolidating data from various sources, the spreadsheet pulls structured data from interconnected systems. Auditors can validate the report by running automated checks that verify compliance with standards like U.S. GAAP or IFRS. The entire process is faster, more accurate and less labor-intensive.

Moving toward machine-readable accounting

Hoffman believes the next major evolution in the field is inevitable: accounting and audit documents will become machine-readable and, more importantly, machine understandable. “These artifacts will no longer just represent static documents. They’ll be dynamic, serving as proxies for databases and knowledge bases,” he said. “Both humans and machines will be able to interrogate these artifacts seamlessly.”

To illustrate, Hoffman pointed to the concept of “semantic spreadsheets” or what he refers to as “knowledge graphs.” These tools aim to integrate accounting, auditing and analytical processes into frameworks that are semantically rich and computationally robust. Hoffman has detailed this approach in works such as Special Purpose Logical Spreadsheets for Accountants and The Case for Semantic-Oriented Accounting and Audit Working Papers.

Overcoming the challenges of transformation

Hoffman acknowledged that the shift requires a significant mindset change. “Trying to understand this evolution using today’s mental framework won’t work,” he said. Quoting Microsoft CEO Satya Nadella, he added, “‘The ‘work’ in ‘workflow’ is undergoing a fundamental change.'”

While Hoffman has already developed prototypes using XBRL to demonstrate the potential of semantic-oriented working papers, he likens their current state to the Wright Flyer. “These prototypes may be rudimentary, but they’re a starting point. Over time, they’ll evolve into something as advanced as the SR-71 Blackbird,” he explained.

Why semantic accounting will succeed

When asked why he’s so confident in this vision, Hoffman provided several reasons:

The double-entry foundation: “Double-entry bookkeeping is a mathematical model that’s been globally standardized since Luca Pacioli documented it in 1494,” Hoffman said. “The semantics are universal, and financial reporting standards like U.S. GAAP and IFRS provide a solid foundation.”

Technology options: While XBRL is a leading contender for the required syntax, Hoffman mentioned alternatives like RDF+OWL+SHACL+SPARQL (the semantic web stack), ISO Graph Query Language (GQL), and modern PROLOG. “Each has advantages, but the goal remains the same,” he noted.

Market-driven demand: “Accountants and auditors will adopt tools that help them do their jobs better, faster and cheaper,” Hoffman emphasized. “The key is creating intuitive, effective software—a challenge that will require collaboration across multiple disciplines.”

Expert collaboration: “This isn’t just a technical problem; it’s a communications problem,” he said. “It will take accountants, IT professionals, computer scientists and knowledge engineers working together to create solutions.”

Building the future, one brick at a time

Hoffman described the development process as deliberate and iterative, much like building a brick wall. “It’s not just about having the right bricks and mortar,” he said. “It’s about craftsmanship—having the right experts who know how to assemble the pieces correctly.”

Quoting legendary hockey star Wayne Gretzky, Hoffman concluded, “You must skate to where the puck is going, not to where it has been. The future of accounting lies in creating tools that anticipate and address tomorrow’s needs. The status quo is doomed.”

For Hoffman, the path forward is clear: The industry is on the cusp of a transformation that will redefine how accountants and auditors interact with data. Semantic accounting is no longer a distant vision, it’s a practical reality waiting to unfold.

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Accounting

IAASB tweaks standards on working with outside experts

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The International Auditing and Assurance Standards Board is proposing to tailor some of its standards to align with recent additions to the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants when it comes to using the work of an external expert.

The proposed narrow-scope amendments involve minor changes to several IAASB standards:

  • ISA 620, Using the Work of an Auditor’s Expert;
  • ISRE 2400 (Revised), Engagements to Review Historical Financial Statements;
  • ISAE 3000 (Revised), Assurance Engagements Other than Audits or Reviews of Historical Financial Information;
  • ISRS 4400 (Revised), Agreed-upon Procedures Engagements.

The IAASB is asking for comments via a digital response template that can be found on the IAASB website by July 24, 2025.

In December 2023, the IESBA approved an exposure draft for proposed revisions to the IESBA’s Code of Ethics related to using the work of an external expert. The proposals included three new sections to the Code of Ethics, including provisions for professional accountants in public practice; professional accountants in business and sustainability assurance practitioners. The IESBA approved the provisions on using the work of an external expert at its December 2024 meeting, establishing an ethical framework to guide accountants and sustainability assurance practitioners in evaluating whether an external expert has the necessary competence, capabilities and objectivity to use their work, as well as provisions on applying the Ethics Code’s conceptual framework when using the work of an outside expert.  

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Accounting

Tariffs will hit low-income Americans harder than richest, report says

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President Donald Trump’s tariffs would effectively cause a tax increase for low-income families that is more than three times higher than what wealthier Americans would pay, according to an analysis from the Institute on Taxation and Economic Policy.

The report from the progressive think tank outlined the outcomes for Americans of all backgrounds if the tariffs currently in effect remain in place next year. Those making $28,600 or less would have to spend 6.2% more of their income due to higher prices, while the richest Americans with income of at least $914,900 are expected to spend 1.7% more. Middle-income families making between $55,100 and $94,100 would pay 5% more of their earnings. 

Trump has imposed the steepest U.S. duties in more than a century, including a 145% tariff on many products from China, a 25% rate on most imports from Canada and Mexico, duties on some sectors such as steel and aluminum and a baseline 10% tariff on the rest of the country’s trading partners. He suspended higher, customized tariffs on most countries for 90 days.

Economists have warned that costs from tariff increases would ultimately be passed on to U.S. consumers. And while prices will rise for everyone, lower-income families are expected to lose a larger portion of their budgets because they tend to spend more of their earnings on goods, including food and other necessities, compared to wealthier individuals.

Food prices could rise by 2.6% in the short run due to tariffs, according to an estimate from the Yale Budget Lab. Among all goods impacted, consumers are expected to face the steepest price hikes for clothing at 64%, the report showed. 

The Yale Budget Lab projected that the tariffs would result in a loss of $4,700 a year on average for American households.

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Accounting

At Schellman, AI reshapes a firm’s staffing needs

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Artificial intelligence is just getting started in the accounting world, but it is already helping firms like technology specialist Schellman do more things with fewer people, allowing the firm to scale back hiring and reduce headcount in certain areas through natural attrition. 

Schellman CEO Avani Desai said there have definitely been some shifts in headcount at the Top 100 Firm, though she stressed it was nothing dramatic, as it mostly reflects natural attrition combined with being more selective with hiring. She said the firm has already made an internal decision to not reduce headcount in force, as that just indicates they didn’t hire properly the first time. 

“It hasn’t been about reducing roles but evolving how we do work, so there wasn’t one specific date where we ‘started’ the reduction. It’s been more case by case. We’ve held back on refilling certain roles when we saw opportunities to streamline, especially with the use of new technologies like AI,” she said. 

One area where the firm has found such opportunities has been in the testing of certain cybersecurity controls, particularly within the SOC framework. The firm examined all the controls it tests on the service side and asked which ones require human judgment or deep expertise. The answer was a lot of them. But for the ones that don’t, AI algorithms have been able to significantly lighten the load. 

“[If] we don’t refill a role, it’s because the need actually has changed, or the process has improved so significantly [that] the workload is lighter or shared across the smarter system. So that’s what’s happening,” said Desai. 

Outside of client services like SOC control testing and reporting, the firm has found efficiencies in administrative functions as well as certain internal operational processes. On the latter point, Desai noted that Schellman’s engineers, including the chief information officer, have been using AI to help develop code, which means they’re not relying as much on outside expertise on the internal service delivery side of things. There are still people in the development process, but their roles are changing: They’re writing less code, and doing more reviewing of code before it gets pushed into production, saving time and creating efficiencies. 

“The best way for me to say this is, to us, this has been intentional. We paused hiring in a few areas where we saw overlaps, where technology was really working,” said Desai.

However, even in an age awash with AI, Schellman acknowledges there are certain jobs that need a human, at least for now. For example, the firm does assessments for the FedRAMP program, which is needed for cloud service providers to contract with certain government agencies. These assessments, even in the most stable of times, can be long and complex engagements, to say nothing of the less predictable nature of the current government. As such, it does not make as much sense to reduce human staff in this area. 

“The way it is right now for us to do FedRAMP engagements, it’s a very manual process. There’s a lot of back and forth between us and a third party, the government, and we don’t see a lot of overall application or technology help… We’re in the federal space and you can imagine, [with] what’s going on right now, there’s a big changing market condition for clients and their pricing pressure,” said Desai. 

As Schellman reduces staff levels in some places, it is increasing them in others. Desai said the firm is actively hiring in certain areas. In particular, it’s adding staff in technical cybersecurity (e.g., penetration testers), the aforementioned FedRAMP engagements, AI assessment (in line with recently becoming an ISO 42001 certification body) and in some client-facing roles like marketing and sales. 

“So, to me, this isn’t about doing more with less … It’s about doing more of the right things with the right people,” said Desai. 

While these moves have resulted in savings, she said that was never really the point, so whatever the firm has saved from staffing efficiencies it has reinvested in its tech stack to build its service line further. When asked for an example, she said the firm would like to focus more on penetration testing by building a SaaS tool for it. While Schellman has a proof of concept developed, she noted it would take a lot of money and time to deploy a full solution — both of which the firm now has more of because of its efficiency moves. 

“What is the ‘why’ behind these decisions? The ‘why’ for us isn’t what I think you traditionally see, which is ‘We need to get profitability high. We need to have less people do more things.’ That’s not what it is like,” said Desai. “I want to be able to focus on quality. And the only way I think I can focus on quality is if my people are not focusing on things that don’t matter … I feel like I’m in a much better place because the smart people that I’ve hired are working on the riskiest and most complicated things.”

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