Ian Grigg on the Evolution of Trust, Triple Entry Accounting and a New Way of Audit
What We Discuss WIth Ian Grigg
Earlier this year, I had read a collection of 7 articles on ‘a new way of auditing’ written by Ian in 2009 whereby he had proposed to ‘perform the check ourselves by relying on a community of volunteers without the need to appoint an external auditor’.
The inability of the auditors to spot the failures that led to the financial crisis had been challenged, and Ian questioned whether ‘audits are part of the problem rather than the solution’.
The main theme with Ian is how technology does a better job at providing trust than what we humans will ever be capable of – and how accounting & auditing can benefit from it.
In this episode, we discuss;
- How technology can incentivize people to collaborate instead of cheating and;
- A new way of audit without the need to appoint an external auditor;
- Limitations of sampling audit
- The future of centralized audit providers;
- How TEA helps to prevent financial failures and frauds;
- His newly published book called ‘The Identity Cycle’
- And much more.
Shownotes
A new way of audit and Triple Entry Accounting
- Ian shares the story of his life’s work and what led him to the notion of Triple-Entry Accounting [2:29]
- I question Ian on how technology helps to provide a different way for people to trust each other [6:04]
- Ian explains how small groups of people can create a community of high trust – and his experience of working with social savings groups in Kenya [10:23]
- Ian proposed a new of way of audit ‘to perform the check ourselves’ in 2009 and I ask him whether his vision has changed [13:06]
- How has smart contracts enabled Ian’s proposal to become a reality [15:27]
- Ian proposed that the audit should be performed by ‘volunteers’ , and I question him whether these volunteers should be paid [17:39]
- Auditors use a sampling approach while blockchain offers the possibility to audit 100% of transactions. I question Ian whether that means auditors can issue an opinion that financials are accurate [20:01]
- Is it really possible to audit 100% of transactions with blockchain [24:29]
- Will we still need centralized audit providers in the future? [27:36]
- How has Ian’s vision of Triple Entry Accounting changed from 2005 when the whitepaper was published (and the concept of Russian Dolls) [32:11]
- How does Triple Entry Accounting compare to Double Entry Accounting, and how does it prevent fraud [36:30]
Regulation, Identity Cycle & Education
- What should be the approach of regulators to move from a backward-looking to real time regulation [43:20]
- How does the Ricardian contract invented by Ian, work in conjunction with Triple Entry Accounting [49:05]
- What are the different schools of thought identified by Ian on identity in his book ‘Identity Cycle’ and what’s the meaning of chamas [53:41]
- How will our digital identities be shaped in the Metaverse? [1:10:11]
- What skills does the accountant and auditor need for the future of work [1:14:16]
- Books and resources recommended by Ian for beginners (Cryptonomicon – Neal Stephenson) [1:15:44]
- Message of Ian for companies to implement Triple Entry Accounting in practice [1:17:44]
- Ian shares an anecdote of Blockone how auditors, banks are discriminating society [1:22:13]
