Featured Guests:

Greg Trompeter - Director, Kenneth G. Dixon School of Accounting

Melanie Fernandez - Partner, BDO

Paul Gregg - Assistant Chair, Finance Executive in Residence, Dept. of Finance; CFO, Rini Technologies, Inc.

Jim Adamczyk - Senior Executive VP / CLO, FAIRWINDS Credit Union

Mike Johnson - Dean, UCF College of Sciences

Episode Transcription:

 

Paul Jarley:                         This is a story of a man who was ahead of his time. Some say that he had the most important idea of the last 500 years. He may very well have helped to invent the future. He most certainly understood the role trust plays in our modern economy. And he was of all things, a mild mannered accounting professor.

Paul Jarley:                         This show is all about separating hype from fundamental change. I'm Paul Jarley, Dean of the College of Business here at UCF. I've got lots of questions. To get answers, I'm talking to people with interesting insights into the future of business. Have you ever wondered, "Is this really a thing?". On to our show. [music]`

Paul Jarley:                         A few months ago, I received an email from Mike Johnson. Mike is Dean of the College of Sciences and more importantly, my drinking buddy. The subject line read, Innovations in Accounting. Who knew? I opened the email and clicked on the link to an article entitled, "Why Everyone Missed the Most Important Invention of the Last 500 Years". I was skimming the article when Greg Trompeter walked into my office. Greg is the director of the Dixon School of Accounting, and so I turned to him and said, "Hey Greg, have you ever heard of triple entry bookkeeping?"

Greg Trompeter:              (laughs). Triple entry bookkeeping.

Paul Jarley:                         Indeed he had.

Greg Trompeter:              It's an idea that came up, maybe in the mid to late 1970s. There was a professor at Carnegie Mellon. His name is Yuji Ijiri and he came up with a notion that for four or five hundred years people had been using double entry bookkeeping as if it were perfection itself. He said, "Well, maybe you could make it better".

Paul Jarley:                         Okay, let's stop right there. I realize a podcast in accounting theory is a bold move. But Dr. Ijiri was quite the dude. His obituary notes he was interested in things like the relationship between accounting, quantum physics, and quantum computing. How many people do you think are trying to connect those dots? He didn't strike me as the kind of guy who would waste his time on frivolous pursuits.

Yuji Ijiri:                               Bookkeeping evolved from single entry, which just recorded what happened, to a double entry, where what happened has to be explained by reasoning.

Paul Jarley:                         Dr. Ijiri might be dead, but in the miracle of today's modern technology, he left behind a YouTube video explaining his ideas around triple entry bookkeeping.

Yuji Ijiri:                               I get attracted by three. Everything three is very interesting and much more complex than two. And what the triple entry might look like.

Paul Jarley:                         He challenged a group of Ph.D. students to figure this out. 10 years lapsed, when he realized...

Yuji Ijiri:                               Nobody is doing anything about it. (laughs).

Paul Jarley:                         So he decided to take matters into his own hands. Yuji wrote two books on the subject. The second of which...

Yuji Ijiri:                               bases on the calculus of taking a type of derivative of existing accounting and come up with a new dimension and then create the double entry at that level. I think it has a lot of applications...

Paul Jarley:                         I know that seems esoteric, but Dr. Ijiri's ideas might just rock your world. As Greg explains, changes in accounting facilitated changes in markets and signific...