Would Triple Entry Accounting Have Saved Thomas Cook?


The world’s leading tourism corporation filed for liquidation after years of accounting malpractice. A new accounting technology might have prevented that.

On June 9th 1841, Baptist priest Thomas Cook set out to walk from Market Harborough to Leicester (15 miles) to attend a Temperance Society meeting in the town. On route, an idea occurred to him:

“A thought flashed through my brain – what a glorious thing it would be if the newly developed powers of railways and locomotion could be made subservient to the promotion of temperance”[1]

For the next abstinence rally, Cook shipped 500 teetotalers for the price of 1 shilling each to Leicester. Thus, professional tourism was born. For the next 170 odd years the company of the same name went the extra mile to find and claim the most exotic destinations. With that antecedent, the irony cannot be lost that Thomas Cook has now declared bankruptcy for not finding the truth in their accounting.

Company out of control

The largest British repatriation since Dunkirk in WW2 brought back 150,000 stranded tourists. They will find no quantum of solace in the afterthought of the UHY Hacker Young Manchester’s corporate finance partner Adnan Sajid: “It is obvious there has been no financial control in that company for some time. Looking at the books, you can see a litany of accounting failures.”[2]

As Sajid told AccountingWEB: “This is a two-to-three-year problem, and they should have come to the experts a long time ago.”

While both shareholders and customers of Thomas Cook didn’t bank on the company’s financial failure, this does not come as a surprise for the Head of Financial Management at Berlin’s Steinbeis University Keith Cleland: “Today’s accounting does not deliver accountability. It never has – accounting was codified in the 15th Century to allow trade. The practice has never really changed while the economy is moving at an ever-increasing pace.”

Hard to cheat when everybody’s looking

On a technical level, current double entry accounting standards have two major drawbacks: The corporation’s finance department has complete control over its own accounting data until the day it is audited. This makes it easy to cook the books and difficult to audit. 84% of economic fraud perpetrators are employees and the companies are the victims.[3] Even executives often have no insight into their own finances.

“All insights usually happen on an ex post facto basis,” explains Professor Keith Cleland. “Today’s business data methods cannot deliver real-time insights. The necessary metrics are usually not even collected. Executives are always at least a quarter and more often years behind.” This explains why, according to AccountingWEB, Thomas Cook tried to “secure a further £200m in funding” in “Eleventh-hour talks.” They just didn’t know until it hit them.

Immutability as the technology of the decade

However, there is a burgeoning new standard on the horizon in the form of Triple Entry Accounting (TEA). In regular accounting, an invoice exists in ACME Ltd’s book as credit and in Widget Corp’s as debit. Both books are private until audited which makes it difficult to check. Triple Entry Accounting adds a third book which is controlled by an independent third party. ACME adds her invoice to the third ledger and puts a timestamp on it that cannot be changed anymore. Widget acknowledges the invoice. The data is now immutable and thus very difficult to manipulate.

“The idea of TEA has been around for about 20 years,” says David Hartley, CEO of TEA-maker Pacio. “But only now does the technology exist to create a decentralized, secure, transparent and immutable ledger.” The technology in question started with Blockchain but has now moved on to securer, cheaper and faster protocols.

There has been no working TEA system in use until today. “We are now scaling the last mile: to have secure immutability and be able to handle the enormous amount of 500 billion global invoices per year,” explains Hartley.

How would that have helped Thomas Cook? “I imagine that the executives and auditors of Thomas Cook had an inkling that their finances went into the wrong direction,” concludes Professor Cleland. “With Triple Entry Accounting and following better metrics everybody would have seen the iceberg when there was still time for somebody to hit the alarm and change course.”


[1] https://www.storyofleicester.info/city-stories/thomas-cooks-leicester/

[2] https://www.accountingweb.co.uk/business/finance-strategy/thomas-cook-management-under-fire-for-litany-of-accounting-failures

[3] https://s3-us-west-2.amazonaws.com/acfepublic/2018-report-to-the-nations.pdf ACFE – Global Study on Occupational Fraud and Abuse

https://www.pwc.com/gx/en/forensics/global-economic-crime-and-fraud-survey-2018.pdf  PWC – Global Economic Crime and Fraud Survey 2018

https://www.refinitiv.com/en/resources/special-report/true-cost-of-financial-crime-global   Refinitiv – True Cost of Financial Crime Report winterblues