In recent years, traditional business bookkeeping methods have come into question because of their deficiencies. The advent of a concept of shared or distributed ledger systems offers a potentially better solution. However, shared ledger systems and their potential remain underresearched. Thankfully, and with Pacio’s input, this is changing.

Accounting and management researchers Ibañez, Bayer, Tasca, and Xu who are associated with the Centre for Blockchain Technologies at the University College of London, have created a landmark study on Triple Entry Accounting and Blockchain technology.  Pacio’s CEO, David Hartley, contributed to the study regarding the company’s work on building the first scalable Triple Entry Accounting (TEA) solution.

The study recounts the invention of double-entry accounting in the 15th century and points out that accounting has continued this way since then. Says the study: “However, a second revolution took place between 1982 and 2008, and it has been rather overlooked. Shared ledger systems emerged as a fruit of this revolution. One prime example of these systems is triple-entry accounting, or TEA.“

“This is the first comprehensive study of its kind,“ says Pacio’s Hartley. “It puts the spotlight on the issue that accounting has not yet caught up with the needs of a rapidly changing economy.”

Double-entry, or legacy, accounting has three main problems:

  • It is easy to commit fraud since transactions can be altered or obfuscated. In 2018, there was an estimated $4 trillion in corporate fraud alone.
  • A complex and expensive system of ‘trusted’ regulators and auditors is required to try to keep things honest. Yet these systems often fail due to chance (sampling methods) and the lack of complete, verifiable detail.
  • The financial reporting systems built on double-entry accounting often offer little insight on how to make better business decisions, usually only delivering results long after the event.


Triple Entry Accounting solves these problems:

  • The financial transactions recorded in a distributed ledger, accessible on an as-needed basis to both parties involved and their auditors or regulator as required, are immutable. Once made, the transaction records cannot be altered. That makes fraud by alteration afterwards impossible. (Fraud by obfuscation where both parties are involved in the crime is not prevented, but that is made easier to find and expose.)
  • The availability of immutable records accessible to all interested parties dramatically reduces the need for trusted third parties. Auditing does not need to be a statistical process based on samples – it can be automated and involve 100% of transactions, providing far better confidence in the data.
  • The availability of all data, verified in real-time, allows active, intuitive reporting and systems to provide management help when it is needed – as things are happening.

There is one major hurdle to overcome for a global TEA solution. Until now, no technology could guarantee decentralized security for a distributed immutable transaction ledger system at the scale required to handle world needs of hundreds of thousands of transactions per second. That has made TEA a challenging undertaking for the global market.

“However, Pacio is developing a transactional system to overcome that limit of scale.” says Hartley. “We will ship that and supporting systems over the coming years and hope to make a good case for the global ascendancy of Triple Entry Accounting, to finally replace the five-century old double-entry accounting system.”

Link to the first paper of four papers comprising the study:


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.”




[3] ACFE – Global Study on Occupational Fraud and Abuse  PWC – Global Economic Crime and Fraud Survey 2018   Refinitiv – True Cost of Financial Crime Report winterblues