The Efficiency of Single Truth: Triple-entry Accounting

Abstract

We conduct a gap analysis to identify shortcomings in current accounting systems, juxtaposing the application of blockchain-inspired triple-entry accounting (TEA). The application of TEA remediates a number of issues or “pain points” in the accounting domain, from multi-party logistic nightmares and billing inefficiencies to “creative accounting.” An inventory of current practice further reveals that, although not intended to serve as an ultimate accounting tool in most cases, DLT has been used to develop a quasi or full TEA application in many separate instances. DLT developers are, with innovative TEA applications, breaking new ground in the accounting world, especially in the logistics and supply chains sectors. Anecdotal evidence suggests that the efficiency effects may well surpass the primary DLT-based TEA input costs, in particular given the addition of single truth: a common, shared ledger with IoT oracles between parties potentiates an agreed understanding of the facts. A TEA system thus reduces friction between parties, and thus lowers costs related to reconciliation and risk management.

Keywords: triple-entry accounting, distributed ledger technology, blockchain, single truth