It’ll eliminate mundane jobs like reconciliation transaction data and having to put manual entries into your ledger. It protects the sensitive data of the transaction and acts as a receipt that verifies the transaction occurred at a certain time. If an organization modifies a transaction’s data in the blockchain, it’ll affect the hash value. Blockchain has gained a lot of traction despite being a polarizing technology and an elusive concept for many. • Being a service auditor for a blockchain used by a consortium of companies to ensure the controls on a blockchain. • Automating transactions with less error in data on both sides of the transaction.
Riskis also minimized because both the supplier andthe organization can see the history of all of theirtransactions in the network, which gives them theability to identify any fraudulent activity. Blockchain in accounting will help accountancy firms and accounting professionals, particularly auditors, with business audits. Since a large part of audits is verifying form 720 preparation the occurrence and accuracy of financial records, this would free up a lot of time for the accounting professional to focus on other things. Blockchain is a technology that promises to change the way business is done.
There will still be a need for professional judgement, and, further, issues such as reconciliation are almost impossible to perform at the current stage of blockchain’s development. In line with McGuigan and Ghio (2019), we argue that accountants will not only have to understand the data on blockchain, they will also have to interpret and explain the implications of this information to management and other decision-makers. As a result, accountancy is likely to become a much more strategically oriented profession. Thus, the uncertainty on measuring cryptoassets leads to the problems of comparability, verifiability, timeliness and understandability in financial accounting (IASB, 2018, p. 6). Therefore, in line with Smith et al. (2019, p. 166), we conclude that for now, “this innovative technology has the potential to change internal management systems …; however, lack of regulation and information makes investment planning for cryptoassets complex and forbidding”. The divergence of crypto classifications means that worldwide regulation and availability of information on cryptoassets will be the most important factors for their spread.
- For auditors, this offers the potential for a transition from a periodical or annual exercise to a continuous matter, one that can now encompass both parties to a transaction simultaneously.
- Then when the time comes that blockchain technology directly impacts your business, you’ll be ready.
- It is this removal of “middlemen” by enabling trusted peer-to-peer exchange that is driving what some have come to refer to as “Web 3.0”, and the creation of $2 trillion of wealth in the last ten years.
- The ability to adapt to keep pace with an increasingly evolving business environment and technological context will also be important.
Blockchain Technology: Shaping the Future of the Accountancy Profession
In a data ecosystem that progressively integrates a nearly infinite set of initially disconnected data, the ability to integrate coherently and apply software agents will be of high importance. With an almost infinite supply of new data, novel methods of measuring business performance will inevitably emerge (Cho et al., 2019). Understanding how blockchain distributes the power of transaction verification and how data are stored and managed to prevent any unauthorised data debt service coverage ratio changes in ecosystems are also key questions in need of investigation. A more fundamental area of future research is the role of financial intermediaries and how their role might change. In the future, we expect to see competition and cooperation among traditional and new intermediaries, and research needs to explore these phenomena to provide guidance to all participants such as incumbents, new entries and regulators (Cai, 2018). The influence of blockchain on risk management and companies’ performance indicators is another promising area for future research as there is a need to identify how stakeholders’ value creation may be affected by implementing blockchain (Cai, 2018).
About Blockchain & Digital Assets at Deloitte
The uncertainty linked to valuing cryptoassets is affecting the development of proper regulations, as this issue affects the fundamental qualitative aspects of financial accounting, such as relevance and faithful representation. Moreover, as highlighted in the Conceptual Framework for Financial Reporting, the principles of prudence, neutrality and conservatism continue to pose challenges for properly presenting cryptoassets in financial statements (FRC, 2018; The Interpretations Committee, 2019). Essential roles for auditors in the future will be assuring the reliability, credibility and authorisation process of blockchain transactions. Blockchains do not provide a guarantee for transactions taking place in the real world.
Blockchain in accounting research: current trends and emerging topics
Deloitte’s 2019 Global Blockchain Survey found that 53 percent of respondents say blockchain has become a critical priority for their organizations (up 10 points from the prior year), and 83 percent see compelling uses for blockchain. Analysing the role of blockchain in changing business models in different industries is sure to be a topic of great interest to researchers (Johannessen, 2013). The efficiency of new business models in comparison to traditional ones may also bring new insights for academics and practitioners. Researchers should test new business models in a market and evaluate transaction efficiency and the degree of novelty in the transaction’s content, structure, steering, resource use, network effects and value creation for stakeholders.
Journals
Those who work in accounting don’t yet need to know all of the ins and outs of blockchain technology, but it’s definitely time to keep an eye on developments at least within your organization. Companies such as Verady have already created bridge technology between crypto assets, exchanges and accounting software. Walmart and others have already implemented beta blockchains in their supply chain. Two of the most widely discussed topics–“the changing role of free marketing proposal template accountants” and “the new challenges for auditors”–only seem to be getting more popular.
As mentioned in the methodology, we checked the validity and reliability of the topic results using citation analysis (Dumay et al., 2018). Table 3 shows the total citation counts for the top 10 articles as listed in Google Scholar citations (5 March 2021). Figure 1 demonstrates that the volume of articles on the topic is increasing annually. The first articles began to appear in 2015 and, by 2019, 4 articles had increased to 40 papers, with 35 already published just in the first half of 2020. The possibilities that blockchain brings to information disclosure, fraud detection and overcoming the threat of shadow dealings in developing countries all contribute to the importance of further investigation into blockchain in accounting. But it’s just going to require more expertise and making sure things are configured right.
For example, O’Leary (2017) argues that public blockchains are not the best approach to capturing accounting or supply chain transactions. Instead, he believes private and cloud-based blockchain configurations will dominate the corporate landscape. In a private blockchain, only a preselected number of nodes are authorised to use the ledger. Yet many researchers speak positively about how blockchain technology will mean provenance in the supply chain that is much more traceable (Kim and Laskowski, 2018). In our opinion, it will be important for all the agents in the ecosystem to understand how blockchain provides similar benefits.