Portfolio Accounting System Handling Uncertainty via Reporting Date Dimension

Resolve Bottlenecks,
Find Innovative SolutionsGenerate Solutions

Solution Overview

Problem

Traditional portfolio accounting systems are inadequate in handling uncertainty in accounting information due to time delays in information issuance, particularly in alternative investments like hedge funds, where final prices are only confirmed retrospectively, leading to challenges in reproducing balance sheets and profit/loss statements accurately and accessing the full life cycle of accounting information.

Innovation Solution

A portfolio accounting system that represents accounting information as streams of sequenced simple transaction states, incorporating a reporting date as an additional time dimension, allowing for the tracking and navigation of accounting information from initial estimates to final confirmed values, and enabling reproducibility of accounting views along both value and reporting dimensions.

Engineering Contradictions & Design Principles

VSEngineering Contradiction Analysis

1Reliability

If traditional portfolio accounting systems use data pairs with value date and account value, then the system structure remains simple, but the system cannot handle uncertainty in accounting information due to time delays in information issuance

Engineering Contradiction:

Improveaccuracy of accounting informationVSAvoidsystem structure

Core Design Contradiction:

ReliabilityVSDevice complexity

Solution Approach 1:

The patent introduces a reporting date dimension in addition to the existing value date dimension, transforming the system from tracking single-point-in-time data to managing two-dimensional temporal data. This allows the system to distinguish between when a value applies (value date) and when it was reported (reporting date), enabling accurate handling of delayed information while maintaining data integrity.

Inventive Principle:

Principle #17Another dimension (Dimensionality change)

Solution Approach 2:

The patent segments accounting information into discrete transaction states with specific temporal attributes (value date, reporting date). Each transaction state represents a distinct snapshot of accounting information at a specific point in time, allowing the system to track the evolution of accounting data through multiple states and reproduce historical views accurately.

Inventive Principle:

Principle #1Segmentation

2Loss of information

If the system tracks accounting information with only value date, then data storage is efficient, but the full life cycle of accounting information cannot be accessed

Engineering Contradiction:

Improveaccessibility of accounting information life cycleVSAvoiddata storage

Core Design Contradiction:

Loss of informationVSQuantity of substance

Solution Approach 1:

By adding the reporting date dimension, the system creates a two-dimensional temporal framework that captures the complete life cycle of accounting information. This allows users to navigate and reproduce any historical state of accounting data by specifying both value date and reporting date, ensuring no information is lost while maintaining efficient storage through structured data organization.

Inventive Principle:

Principle #17Another dimension (Dimensionality change)

3Reliability

If the system reproduces balance sheets for a given value date, then accounting views are accessible, but reproducibility cannot be guaranteed when information is delayed

Engineering Contradiction:

Improvereproducibility of accounting viewsVSAvoidtime delay in information issuance

Core Design Contradiction:

ReliabilityVSLoss of time

Solution Approach 1:

The system preliminarily records both value date and reporting date for each transaction state, creating a complete temporal framework in advance. This preliminary structuring enables the system to reproduce any historical accounting view accurately, regardless of information delays, by simply querying the appropriate combination of value date and reporting date without requiring real-time data updates.

Inventive Principle:

Principle #10Preliminary action

4Productivity

If intermediate estimates are issued before final prices, then timely accounting information is provided, but uncertainty and fuzziness in pricing information increases

Engineering Contradiction:

Improvetimeliness of accounting informationVSAvoidpricing information accuracy

Core Design Contradiction:

ProductivityVSMeasurement precision

Solution Approach 1:

The system dynamically tracks the evolution of pricing information from initial estimates to final confirmed prices by recording each intermediate state with its corresponding reporting date. Users can access any stage of the pricing evolution by querying the appropriate reporting date, allowing the system to adapt to different information availability scenarios while maintaining measurement precision through explicit temporal attribution.

Inventive Principle:

Principle #15Dynamics

Data Source

PatentUS7653578B2Portfolio accounting system and method for handling uncertainty in accounting information

Publication Date: 2010.01.26 INFONIC

AI summary

Portfolio accounting systems and methods are adapted to handle uncertainty in accounting information due to time delay in information issuance. Accounting information is represented by streams of sequenced simple transaction states, each individual state describing the state of an account or its changes as known at a certain point in time while the stream ties the consecutive states into a life cycle of the information improving over time. A first simple transaction state attribute corresponds to the traditional value date. A second attribute corresponds to a reporting date. A third attribute corresponds to the traditional account value or relative/absolute changes thereof.