Triple Entry Bookkeeping

* Article: A fable about TRIPLE ENTRY BOOKKEEPING and other sci-fi adventures in SUMPTUOUS ACCOUNTING on Parallearth. Created by Karl H Richter, 2018

URL = http://www.sumptuousaccounting.org/richter_2018_triple_entry_bookkeeping_webversion.pdf

"Triple Entry Bookkeeping is an accounting methodology that incorporates the non-financial impacts of commercial transactions. These externalities, whether positive or negative, are by definition not reflected in conventional accounting methodologies, and therefore often excluded from market prices and asset valuations. Such omissions can result in market failure if price sensitive decisions are disconnected from their broader societal consequences.

Triple Entry Bookkeeping corrects this imbalance by modifying both the debit and credit entries to reflect the externalities of a transaction, so that they align more closely with the true cost (or value). This has the effect of adjusting the perceived price for both the buyer and the seller, as well as the future purchasing power of market actors based upon their historic choices. It was inspired by studying the behaviour of social impact investors when they offer concessional capital pricing in anticipation of positive impact. This departure from the risk adjusted norms of modern portfolio theory is referred to as the implied impact of investments.

Triple Entry Bookkeeping operates at the level of the underlying mercantile activity. It expands traditional accounting methodologies to integrate both positive and negative impacts, through a unified approach, across the full gamut of economic activity. It also includes elements of behavioural tax and money supply functions, and assumes a context of digital currency to enable the functionality of programmable money."