A recent study by the Association of Certified Fraud Examiners found that most companies lost a median of 5% a year on fraud. Globally, there is an estimated $3 Trillion found to be lost every year due to financial fraud!Sweetbridge has developed the answer to assurance in today’s world using the blockchain to provide continuous assurance.At Sweetbridge we can demonstrate that:Integrating self-sovereign identity, accounting treatments, legal agreements, and payment rails into a synchronous transaction, reduces the susceptibility to misstatement and fraudContinuous assurance replaces the retrospective form of audits with a forward-looking preventive audit, also offering improved controls around financial reportingThere are new opportunities for accountancy firms to offer an ongoing continuous assurance service, becoming custodians of trustReducing the costs of audits to organizations, by automating the elements of an audit that are currently manual, reduces associated billing costs.Let’s take a case study such as Patisserie Valerie Holdings.*Patisserie Valerie had accounting irregularities appear in its books in October 2018. Its accounts appear to have been misstated over a number of years and it was recently bailed out to the tune of £20m by its Chairman Luke Johnson after its ex-chief financial officer Chris Marsh admitted a £1.14 million unpaid tax bill, resulting in a winding up order. Marsh and auditors Grant Thornton are under investigation by the Financial Reporting Council (FRC).The Fraud Solution — Continuous AssuranceToday, any commercial activity has to deal with 4 fundamental systems that are independent and frequently out of sync due to errors or fraud:Identity This is the identity of the people, organizations, and assets involved in transactions. Today, there is no unifying system or process for identity that is normalized across systems in commerce — especially across organizations or organizational systems.Legal This is the legal agreements and regulatory context of a transaction. There is no binding between a transaction and the agreements (or regulations) that control the transaction. Governments and companies frequently have a lack of clarity about which regulations apply. Legal agreements are always documents and don’t control the actions of the parties or the behaviour of systems.Accounting Accounting systems today are record-keeping systems, and not integrated into the identity, legal or payment systems except through interfaces. This means that transactions must be reconciled with other systems to keep them in sync. It also means that auditors, who need evidence to provide a basis for their opinion, must verify a company’s records with third party records.PaymentPayments must be made through banks or other payment networks. These payment systems are not part of the accounting system and are rarely the same between buyers and sellers. This creates errors, delays, and misapplications of cash. But worst, the payment rails today don’t carry the information a government needs to audit the transactions, the identities, contracts and accounting treatments of all counterparties in the transaction.Almost all errors in accounting including fraud and financial crime happen as a result of these systems not sharing the same state.Sweetbridge, a real-time financial system, continuously assures that information and commitments can be trusted between parties. We believe our continuous assurance platform will allow companies, such as Patisserie Valerie, to have technology and value integrated into one system that fuses together identity, legal agreement, accounting, and payment. Doing this would allow for frictionless and trusted commerce that can be automatically audited in real-time, eliminating problems like the one Patisserie Valerie is currently facing.Double entry bookkeeping was one of the greatest advancements in commerce. Luca Pacioli’s treatise on mathematics, written in 1494, revolutionized the trust built into a company’s records. It transformed how businesses oversaw their operations and enabled improved efficiency and profitability. But, it is time for another leap ahead in efficiency and profitability of financial records. We believe triple entry accounting is the next major advancement and we are building a triple entry accounting system that will do more than provide continuous assurance for one company, like Patisserie Valerie, but will provide continuous assurance across a whole network or economy.The blockchain provides the technology to make all of these systems one system; not just internally to a party, but across all counterparties in transactions, and thereby potentially saving millions for companies such as Patisserie Valerie.* Sweetbridge has no affiliation with Patisserie Valerie, they are not a current customer and we are not in discussions with them. This use case is merely to show what the Sweetbridge protocols could do to help in a publicly noted case of accounting discrepancies.The Problem is Fraud. The Answer is Continuous Assurance was originally published in Sweetbridge on Medium, where people are continuing the conversation by highlighting and responding to this story.