REA Enterprise Ontology Source Page
The REA enterprise ontology is based on elements of the REA model first published in the early 1980s as a core framework for transaction processing of economic phenomena in a shared data environment. The primitives in that original framework were developed with data modeling and abstraction techniques (Codd, Chen, and Smith & Smith) and published in The Accounting Review. REA reorients transaction modeling: (1) away from the traditional legacy view of financial-based, single-company, and after-the-fact reporting, and (2) toward the enterprise-wide and interconnected perspective of modern ERP and e-commerce types of information systems. The original REA paper was based heavily on primitives developed from a microeconomic perspective, and the extended REA ontology of the present has the same underlying foundation. The object version of the original model is shown here, along with some examples and the extensions into commitment-images and type-images. The REA acronym derives from the left-to-right orientation of the framework's original object components: economic Resources, economic Events, and economic Agents.
For a quick visual overview of how this ontology fits into accounting, here is a recent presentation that was done in July of 2002.
This source ontology page has seven papers. The first or seminal paper is conceptual and basic, and it is clearly the most important because its definitions have stood the test of time in the tightly controlled environment of its home discipline. Most of the leading textbooks in AIS (accounting information systems) use this paper’s primitives as a conceptual framework. The second paper is much shorter, and it explains in very practical terms the vertical extensions of REA to enterprise-wide value chains and workflow specification. The third paper is an easy-to-understand example of this same REA 3-level architecture, except with a wide-ranging example of a car rental enterprise. The fourth paper is more philosophical in nature, and it uses the structured ontology ideas of John Sowa to place the REA economic primitives, including commitments, in perspective. The fifth paper is a work-in-progress, and it has the best explanation of the current REA enterprise ontology, components of which are embedded in the current version of the ebXML and UMM metamodel. This paper will have a major new version available soon (October-November of 2002). Specification of logical axioms for the REA ontology is also a work in progress, but we have established a subset of this work in the sixth paper below which explains intensional reasoning for the core accounting objects of REA. There is also a link to a seventh paper (co-authored with Bob Haugen of Logistical Software and ebXML) which explains for practitioners the use of REA in across-company supply chains.
There are additional REA papers and explanations available here, including some papers that trace REA development and use. Please feel free at any time to direct requests for additional work, clarifications, and questions to Bill McCarthy at Michigan State University (517-432-2913) (email@example.com).