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Triple Entry Accounting:
Reducing Financial Fraud Using
Block Chains
presented by Daniel Winters,
MS Taxation, MBA
www.Glo...
- Bitcoin Accounting for Businesses &
Individuals, e.g. Miners, Traders, Bitcoin ATMs
- Tax returns, and calculating Bitco...
I. Double Entry Accounting: What we have
II. Triple-Entry Accounting on Block Chain: What we need
III. Accounting & Auditi...
Distributed Ledger = Accounting Ledger
Debit = entry on left side of T-Account Credit = entry on right side of
T-Account
Double Entry Accounting:
What we have
Double Entry Accounting
Triple Entry Accounting:
What we need
 Ian Grigg & Todd Boyle: Invented concept in 2005
 http://iang.org/papers/triple_e...
http://villagemall-ceo.blogspot.com/2015/06/triple-entry-accounting-and-block-chain.html
 Data from trusted third parties: Banks, Paypal, credit cards , Bitcoin
payment processors, and the IRS (1099s, etc.)
 A...
1. Fraud:
- If adequate controls not in place, company’s ledger can be
changed/manipulated.
- Employees/owners can coopera...
 The transaction IS the receipt.
 Transactions recorded in a cryptographically secure block chain
 Immutable records = ...
Block chain can provide:
Privacy by encryption
Transparency to authorized parties (select employees,
regulators, auditors,...
Triple-Entry Accounting:
The Block Chain is the Bridge
 Bitcoin companies could early adopters: Exchanges, payment processors,
Bitcoin ATM company
 Any company which needs sec...
 Balanc3: Exchange of Value & recordkeeping. Ethereum block chain to
create smart contract that exchanges value, using Et...
Tierion.com
Blockchain receipt: anchoring data in the Bitcoin
block chain
• Scales to millions of records
• Receipts are portable
• Public blockchain
• REST API - developers
• HTML Forms - busines...
Triple-Entry Accounting:
The Block Chain is the Bridge
Who wants to drive over the Bridge?
Block Chain Tax & Accounting
www.GlobalTaxAccountants.com
Triple Entry Accounting
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Triple Entry Accounting

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Daniel Winters of GTA on Triple Entry Accounting.

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Triple Entry Accounting

  1. 1. Triple Entry Accounting: Reducing Financial Fraud Using Block Chains presented by Daniel Winters, MS Taxation, MBA www.GlobalTaxAccountants.com
  2. 2. - Bitcoin Accounting for Businesses & Individuals, e.g. Miners, Traders, Bitcoin ATMs - Tax returns, and calculating Bitcoin gains/losses - Foreign Tax: U.S. companies and individuals with international activity Block Chain Tax & Accounting
  3. 3. I. Double Entry Accounting: What we have II. Triple-Entry Accounting on Block Chain: What we need III. Accounting & Auditing is about TRUST IV. Double-Entry Accounting: Problems V. Triple Entry Accounting: Solutions for the enterprise VI. Who needs this? VII. What companies could build Triple-Entry Systems? Balanc3, Rootstock. Tierion, Factom, Tendermint Agenda
  4. 4. Distributed Ledger = Accounting Ledger
  5. 5. Debit = entry on left side of T-Account Credit = entry on right side of T-Account Double Entry Accounting: What we have
  6. 6. Double Entry Accounting
  7. 7. Triple Entry Accounting: What we need  Ian Grigg & Todd Boyle: Invented concept in 2005  http://iang.org/papers/triple_entry.html  Ian now architecture consultant at R3CEV
  8. 8. http://villagemall-ceo.blogspot.com/2015/06/triple-entry-accounting-and-block-chain.html
  9. 9.  Data from trusted third parties: Banks, Paypal, credit cards , Bitcoin payment processors, and the IRS (1099s, etc.)  Accounting records = mutually accepted reality  Investors trust audited financial statements  Accountant is a trusted 3rd party: Do you trust your accountant?  Consensus, in blockchain terms  Censorship resistance = Need records that can’t be altered easily. Accounting & Auditing is about TRUST.
  10. 10. 1. Fraud: - If adequate controls not in place, company’s ledger can be changed/manipulated. - Employees/owners can cooperate to steal from the company. - Accountant = trusted third party. Sometimes, accountant is a thief. - Auditor is corrupt. People are the weak link. 2. Reconciliation process: need one ledger - Transactions from other ledgers: bank accounts, Paypal, Bitcoin, credit cards. - Manual review of 3rd party data. Time consuming and expensive. - Duplication of data Double-Entry Accounting: Problems
  11. 11.  The transaction IS the receipt.  Transactions recorded in a cryptographically secure block chain  Immutable records = perfect audit trail  Can’t commit fraud if transactions can’t be changed  Payment disputes: eliminated Triple-Entry Accounting: Solutions for the enterprise
  12. 12. Block chain can provide: Privacy by encryption Transparency to authorized parties (select employees, regulators, auditors, investors) Triple-Entry Accounting: Privacy vs. Transparency
  13. 13. Triple-Entry Accounting: The Block Chain is the Bridge
  14. 14.  Bitcoin companies could early adopters: Exchanges, payment processors, Bitcoin ATM company  Any company which needs secure accounting records.  What data? - Accounting transactions, Bitcoin & fiat currency - AML/KYC data on users - New York BitLicense & states require comprehensive data on users & transactions - Your business is based on the blockchain. Why not anchor your transaction data in the blockchain? Triple-Entry Accounting: Who needs this?
  15. 15.  Balanc3: Exchange of Value & recordkeeping. Ethereum block chain to create smart contract that exchanges value, using Ethers. Transaction = receipt. Public block chain.  Factom: recordkeeping. Timestamped data hashed into the block chain.  Tendermint:  Tierion: Recordkeeping – Anchoring data in the Bitcoin block chain.  Rootstock: Exchange of Value & recordkeeping. Sidechain of Bitcoin. Uses Rootstock chain to create smart contract that exchanges value, paying with Rootcoins. Triple-Entry Accounting: Who’s building the bridge?
  16. 16. Tierion.com Blockchain receipt: anchoring data in the Bitcoin block chain
  17. 17. • Scales to millions of records • Receipts are portable • Public blockchain • REST API - developers • HTML Forms - business users • connect to 500+ apps Accounting System
  18. 18. Triple-Entry Accounting: The Block Chain is the Bridge
  19. 19. Who wants to drive over the Bridge?
  20. 20. Block Chain Tax & Accounting www.GlobalTaxAccountants.com

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