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It’s Hard to Cook the Books when Everyone is in the Kitchen: An Exploration of Triple Entry Accounting & Blockchain
Joshua Chicarelli, Mark M. Lennon

Last modified: 2020-09-15

Abstract


The purpose of accounting is to capture and convey information about a business to those individuals who have an interest in the business. First developed for renaissance merchant bankers, a double-entry accounting system enables business owners to maintain detailed records of what they own and how they came to own it. While historically highly effective, in our modern, more complex economy, in which owners and day-to-day operators are often separate entities, double entry accounting comes up short. Asymmetries of information and agency problems are prevalent which lead to financial fraud. Proposed over thirty years ago, triple-entry accounting seeks to rectify these issues, but was never widely adopted due to concerns about cost and complexity. With the development of blockchain technology, a crypto-graphically secure, immutable ledger, open source software solution best known for crypto-currency applications, triple-entry accounting’s time is finally here. By describing both the technology, and examining actual firm implementations, this paper explores the costs and benefits of implementing a blockchain driven, triple-entry accounting system.


Keywords


finance, accounting, blockchain, information systems