Introducing Accounting Blockchain – Connecting businesses and Empowering People

Our current accounting system and standards is based on a double-entry bookkeeping system. This double-entry system has revolutionized traditional bookkeeping during the Renaissance, and we’ve used this system alongside independent auditing bodies, until the present day. The traditional double-entry bookkeeping may just about to be disrupted and evolved to a triple-entry accounting system using the blockchain technology. So why do the CPA profession needs to adopt or embrace the blockchain revolution? Here are some points the CPA profession can consider.

There are a lot of researches going into blockchain model accounting. Beyond the hype surrounding Bitcoin, Ethereum, and all other cryptocurrencies that uses the blockchain technology. There is a rising fear that this new technology will automate a large portion of the accounting industry, putting millions of jobs at risk. While it’s true that the accounting industry is likely to be disrupted the most by blockchain technology, it’s effect are not all doom and gloom. In fact, blockchain technology offers many opportunities for professionals in the industry. It’s likely we’ll even see elements of blockchain and its applications added to CPA review courses. Making it vital for accountants of all levels to get up to speed as soon as possible.

The first and most obvious benefit of blockchain in accounting and audit is its potential for reducing errors when reconciling complex information from disparate sources. Accounting records, once entered in the blockchain, are not alterable, even by the owners of the system. With every transaction recorded and verified, the integrity of the record is guaranteed.

Blockchain technology has no central authority, the technology itself exists as a file that maintains the continuously growing list of records. The so-called blocks in the chain. Each block is time stamped and contains a ‘fingerprint’ – a link to the previous block.

So, once a transaction is entered in the blockchain, it can’t be altered. Corrections can be made after the fact, but these are transparent to all parties. Preventing any manipulation or falsification of the data. In this way, auditing becomes easier, and consequently some of the manual tasks involved in auditing may disappear. It is highly unlikely, however, that auditors will be completely replaced.

Blockchain technology will instead enable accounts to monitor financial performances in real time. Security may become easier to manage, as blockchain will make financials more secure against hacks. The blockchain itself being an exceptionally strong encryption, impervious to a cybercriminal simply hacking in and making any unauthorised changes to the data.

The verification of the transaction in the blockchain also eliminates the need for both parties to enter transaction records into their own ledgers. Another added measure of security and compliance may be a triple-entry system where transactions are entered in the ledgers of parties as well as into the blockchain. Such processes would enable a huge reduction in the time cross checking of financials for auditing. In truth, the ability for both accountants and businesses to keep informed of changes in the business will help elevate accountants to a position of a trusted business advisor, rather than a number cruncher.

Removing the necessity for companies to keep and reconcile records of the same transactions in their separate databases or ledgers, and recording of transactions in real time, are the capabilities of blockchain that are poised to disrupt the traditional methods of invoicing, payment, contracts and documentation processing across all industries, large and small. It isn’t really a matter of if blockchain technology will become pervasive in the accounting industry, it’s a matter of when. Therefore, it’s essential practitioners in the industry become familiar with it’s applications and the opportunities it presents. If you’re a finance professional, then now is the time for you to begin learning all you can about blockchain.

This is because the innovations which blockchain is bringing with it, smart contracts, peer-to-peer currency, financing and lending and other experimental ideas, will undoubtedly require the services of informed and experienced financial advisers, accountants, and other industry professionals. Right now, pivoting and evolving to learn new skill-sets will only bring value as money continues to pour into the fledgling blockchain industry.

As technologies like blockchain, artificial intelligence and automation begin to disrupt our industries, we may see accounting embraced as a more creative profession. Perhaps finance professionals will also be trained in code, in order to deploy technologies to the greatest effect. Perhaps they’ll instead begin a profession with a higher focus on soft skills.With these new technologies performing the grunt work, the skills that will make accountants stand out, will be those foreign to robots and self-validating algorithms. Skills accountants also use every day – creative thinking, problem solving and cognitive flexibility.

The way these technologies will transform the profession in the future is by stripping away repetitive tasks and the mundane drudgery of things like record keeping. Freeing people to apply their creativity and intellect to more areas, through learning how to leverage the analytical capabilities of the emerging technology and their processing power, to bring about success.

There are still plenty of questions surrounding blockchain, and how the industry will adopt it. Accountants should strive to inform themselves, and become part of that conversation, to help drive the industry’s direction.