Juan Ignacio Ibañez on Triple Entry Accounting
What We Discuss With Juan Ignacio Ibañez
All of you will be familiar with a double entry accounting framework, the bookkeeping system where all debits must be equal to the amounts entered as credits.
But even if your accounts are balanced, that does not necessarily mean the reporting figures are free from misstatements, whether due to fraud or error. Which is the reason why audits are required.
Triple Entry Accounting allows for a shared ledger and with the advent of blockchain, this shared ledger can now be trusted due to the inherent features of cryptography.
When I first read Triple Entry Accounting,I had the firm conviction that if what this accounting framework promises in theory could be applied in practice, it can be set to revolutionize the future of bookkeeping.
In this episode, we discuss;
- The limitations of the current double entry accounting system;
- What triple entry accounting really means and how blockchain has made the idea viable;
- Use cases and examples of companies building business applications using the framework of triple entry accounting;
- Challenges and solutions to accelerate adoption of triple entry accounting;
- And many more…
Shownotes
Triple Entry Accounting Introduction
- Juan shares the story of how he became interested with Triple Entry Accounting and his 3 areas of research [3:04]
- The limitations of double entry accounting (discrepancies between parties of same transaction, costly, time-consuming, etc) [5:37]
- The limitations of audit (sampling, audit opinion issued months after reporting period end) [8:54]
- What is triple entry accounting? [10:43]
- Example of a transaction with triple entry accounting [13:56]
- Juan tells us more about the work of Todd Boyle and Ian Grigg, known as the fathers of triple entry accounting [17:31]
- With double-entry accounting, you record both debits and credits in the same books. But does triple entry accounting mean you only record one entry? Juan clears the confusion. [19:08]
- The distinction between triple entry accounting and triple entry bookkeeping [22:03]
Use cases and applications of Triple Entry Accounting
- Limitations of triple entry accounting [23:22]
- Examples of companies building business solutions from triple entry accounting framework [27:07]
- Challenges to overcome for triple entry accounting to be widely used and how to facilitate the transition [29:28]
- Solutions to accelerate adoption of the technology and why more accountants need to jump on board [32:14]
- What blockchain networks are primed to allow for the implementation of triple entry accounting? [34:08]
Knowledge gap in the accounting industry
- How can the accounting industry as a whole and accountants start to educate themselves? [37:19]
- Is it important for accountants to have a basic understanding to read smart contracts [38:56]
- Closing thoughts for accountants to embrace triple entry accounting and small steps they can immediately take to contribute to its adoption [41:51]
