Operationalizing Accounting Reporting in System Dynamics Models

Abstract

System dynamics implementations of financial statements are currently limited by the lack of a simple to use, yet sufficiently detailed model that operationally replicates the accounting reporting process for the income statement, balance sheet, cash flow statement, and statement of changes in owners’ equity. While system dynamics accounting structures exist, they are inconsistently applied in the literature. In this paper, we offer a comprehensive accounting model in the hope that academics and practitioners will use its structures to better represent accounting reports in their projects.

Uncovering dynamic complexity in annual reports: a methodological approach using resource mapping

“…Within the stream of the qualitative SD literature, this study contributes to the application of qualitative SD principles and tools in the business domain by relying on accounting information (e.g. Bianchi, 2002; Yamaguchi, 2003; Melse, 2006; Giorgino et al ., 2020; Pierson, 2020; Yamaguchi and Yamaguchi, 2021). However, the main contribution, which hopefully can be employed in other areas of application, is the use of stock‐and‐flow diagrams in qualitative SD modeling, a novel contribution to qualitative SD that facilitates the understanding of dynamic complexity compared with causal loop diagrams.…”

Early Warning Early Action for the Banking Solvency Risk in the COVID-19 Pandemic Era: A Case Study of Indonesia

“…It aims to develop a simulation model to generate early warnings and identify early actions to mitigate bank solvency risks using Powersim Professional 10© software. Furthermore, it intends to advance the modeling of bank financial statements and several important financial ratios developed by Islam et al (2013); Pierson (2020) and Hidayat et al (2021) through causal-loop and stock flow diagrams.…”

“…The pattern of the relationships between the accounts in the financial statements are modeled through causal-loop and stock-flow diagrams (García 2019). The financial statements model of system dynamics was developed in some studies by Islam et al (2013); Wu (2014); Istiaq (2015); Pierson (2020); Aksu and Tursun (2021); Pavlov and Katsamakas (2021); Hidayat et al (2021) to analyze financial reporting, banking risk management, management control systems, and solvency stress-testing.…”

System Dynamics Approach and Its Usage in Social Sciences

“…Ayrıca, tümevarım deney grubundaki öğrencilerin problem çözme becerilerinin tümdengelim deney grubundaki öğrencilerin problem çözme becerilerine göre daha yüksek ortalama puanlara sahip olduğu ve sistem dinamiği yaklaşımının öğrencilerin problem çözme becerilerini geliştirmede önemli bir rol oynadığı belirtilmiştir. Pierson (2020) sistem dinamiği modellerinde muhasebe raporlarının işlevsel hale getirilmesi amacıyla kapsamlı bir muhasebe modeli sunmuştur. Çalışmada, muhasebe raporlama sürecini sistem dinamikleri çerçevesinde oluşturan ve gelecekte bu modellemeleri kullanacak kişilerin bu yapıları projelerine dâhil etmelerine olanak tanıyan bir modelin geliştirildiği belirtilmiştir.…”