Algorithmic regulation: blockchain and AI for financial disclosure automation

Jonny Fry
4 min readNov 28, 2023

Written by Jason Meyers at Auditchain Labs AG

In the rapidly evolving landscape of financial regulations, regulatory agencies are gearing up to deploy advanced investigative tools powered by artificial intelligence (AI) in 2024. These tools aim to bolster the capabilities in identifying companies that violate disclosure requirements. The eXtensible Business Reporting Language (XBRL) is a machine-readable syntax and is a mandate for corporate filings and for regulatory analysis of financial and business reports in 60 jurisdictions across 100 regulatory agencies.

217 SEC enforcement actions against public companies between January 1, 2021 and October 31, 2023, make clear that regulatory scrutiny of financial and operational disclosure is on the rise. In Europe, the machine readable XBRL instances are now within the scope of comprehensive audit engagements, a directive under the Committee of Auditing Oversight Bodies (CEAOB) since November 9, 2021.

The landscape of the Securities Exchange Commission (SEC) enforcement actions

The SEC’s enforcement actions reveal a noteworthy trend. The year 2024 is expected to either tie or surpass these figures, indicating an intensified focus on disclosure violations, especially those relying heavily on financial data and financial statements. When you combine all the scandals in the audit profession with disclosure violations by their clients, the big question will be if the surge in enforcement actions uncovers a far more seismic dislocation between fantasy and reality.

The role of AI in SEC investigations

The integration of AI into the SEC’s investigative tools signifies a paradigm shift in regulatory oversight. AI enables the SEC to process and analyze vast quantities of corporate disclosures efficiently, enhancing the agency’s ability to identify potential violations. This technology-driven approach reflects a commitment to staying ahead of the curve in an era where financial data complexities continue to grow.

Standard business report model: a game-changing specification

In the quest for regulatory compliance and enhanced financial integrity, a forthcoming standard specification at the Object Management Group (OMG) called Standard Business Report Model (SBRM) emerges as a game-changer. SBRM leverages the power of bi-directional structured data…

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Jonny Fry

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