Abstract :

Double-entry accounting has been used globally for the past six hundred years and has become the base for all corporate financial reporting. Blockchain technology with distributed ledger now provides a new method of accounting termed “triple-entry accounting”. This method consists of recording and storage of business transactions, as a third entry on the blockchain. This third entry is expected to deliver a system that is trustworthy, immutable, and transparent. This study conducts a detailed review of the present literature on triple-entry accounting with blockchain technology and its impact on fraudulent practices. The review shows current literature has limited information on how this methodology will deter financial and accounting fraud. Drawing on the case studies of twenty-four companies involved in fraudulent practices globally, this paper describes common practices in manipulating financial statements, falsifying accounting records, and fraudulent banking transactions. The study explains the mechanics of how these practices can be prevented using triple-entry accounting in the blockchain environment and how the technique will bring about changes in the audit process and in the roles of internal and external auditors in the organization. The study recommends research propositions focused on governance and financial performance of a company when this method is adopted.

Application :

Financial Fraud Prevention

Link to the Full Research Article : https://ssrn.com/abstract=4036726