The future is calling: blockchain’s impact on the accounting profession

Table 10 compares blockchain characteristics with an accounting, accountability and auditing focus related to the AAAJ’s most cited articles (Dumay et al., 2018). Thus, using detailed syntax programming, auditors could automatically verify corporate information directly, ensuring truthfulness. Blockchain application in this context creates a mechanical method of data transmission and, subsequently, approval by all users in case of information modification. Blockchain 2.0 includes the economic market and extends to transactions, such as stocks, bonds and smart contracts. Finally, Blockchain 3.0 focuses on applications of Blockchain 1.0 and 2.0, such as digital voting, digital health records and digital art. This analysis covers the third phase, starting in 2015 with an exponential increase from 2016 to date (Figure 1).

  • If this subject interests you, understanding closing your books will help you more easily see the promising value of blockchain.
  • Blockchain technology has the potential to be a useful tool, but should be regarded with skepticism when it comes to its utility and implementability in organizational settings.
  • The findings of this chapter can be used by the key stakeholders involved in professional practice in the accounting and auditing domain.
  • In addition, unforeseen add-on tech and services will be needed and created.

Section 7 concludes the paper with the implications of this research for theory, practice and policy, along with the limitations of the study. The purpose of blockchain, namely, to facilitate trust without intermediaries, has raised concerns about the future of auditors and their role in society. However, thus far, these worries are not justified because some aspects of the auditing process still require professional judgment (Turker and Bicer, 2020). Some audit procedures, such as sampling, confirmation letters, payroll examinations, invoice evaluations and reconciliation, will become less expensive or obsolete (Turker and Bicer, 2020). Others, such as systemic evaluation, risk assessments, predictive audits and fraud detection, will attract new and significant interest (Bonyuet, 2020). Importantly, while technologies provide unparalleled benefits in the audit process, they do not stand alone in the transformation of the audit.

5 Focus

Accountants’ mix of business and financial nous will position them as key advisers to companies approaching these new technologies looking for opportunity. Currently, regulators monitor the field of cryptoassets on a case-by-case basis, but not to the extent that investors, or would-be-investors, could determine with certainty how cryptoassets may be treated (Smith et al., 2019). Nor are all market participants eager to treat cryptoassets as a security due to their volatility, making it difficult to ascertain an appropriate value to record for income statement and balance sheet purposes (Smith et al., 2019; Tan and Low, 2019). Finally, it is worth noting that financial accounting is characterised by accounting prudence and conservatism, which can lead to differences between a company’s market and book value (Dumay and Guthrie, 2019). As cryptoassets are often characterised as a potential future economic benefit, their acquisition may lead to even greater discrepancies between the market and book values of companies, especially in markets with optimistic valuations of intangible assets.

  • However, cryptocurrencies do not meet the financial asset definition provided by IAS32 (Procházka, 2018; Morozova et al., 2020).
  • Blockchain has several characteristics that repeat and configure elements validated by theory.
  • The authors are also thankful to Filippo Zatti and the research unit Blockchains and Artificial Intelligence for Business, Economics and Law (BABEL) for their expert insights into the complex topic of blockchain technology.
  • Although auditing will continue to evolve (as it always has), auditing is likely to be around well into the foreseeable future.
  • If blockchains integrate information and processes within and across company boundaries and are in synergy with emerging technologies, then it will be possible to simplify and accelerate business processes, increase cybersecurity protection and reduce or eliminate the roles of intermediaries.

Many experts believe we are years away from mainstream adoption, while others claim with the advent of AI and ML, the prospect of blockchain technology will be exponential. But what can we do as individuals and as organizations to prepare for a change in “the way we work”? From an individual perspective, having an awareness of the technology through available self-study could help set a foundational understanding. Furthermore, keeping up to date with industry publications and guidance surrounding blockchain technology will help bridge the learning curve for when this technology gains mass adoption.

Possible solutions for this issue include establishing conflicting interests between involved parties by design (McAliney and Ang, 2019) or providing digital IDs of real-world objects (Alles and Gray, 2020). The latter suggests the complementarity between blockchain and Internet of Things (IoT)/radio-frequency identification (RFID) technology (Sheldon, 2019). This topic includes 64 research products published between 1980 and 2021.

The yellow line depicts articles published in journals ranked as “ACCOUNT” by the ABS AJG2021 journal ranking. Figure 1 shows a considerable increase in interest since 2016, in which year accountants and practitioners began to seriously consider blockchain as an accounting tool (Kokina et al., 2017). Second, this study investigates how accounting practice will be impacted by blockchain. Blockchain can improve information timelines and accounting reliability because of its decentralization and transparency, but it will also require new competencies, attention to scalability and accounting standard reconciliation.

One of the challenges for implementing blockchain is context (Stratopoulos and Calderon, 2018). It is unlikely that small firms would want to make their transactions publicly available or that they would benefit from blockchain accounting as much as big companies. Distributed ledgers may not be attractive or even needed by every company, so there is a real need to ascertain exactly what the up and downsides of implementing blockchain are. As O’Leary (2019) observes, the opportunities for using blockchain may be limited by the desire and ability of all agents in the ecosystem to implement it. Because blockchain eliminates the need to enter and reconcile information in multiple databases, efficiency gains are a key strength. Blockchain also saves time by increasing the speed of transactions, reducing human error and minimising fraud (Kokina et al., 2017; O’Leary, 2017).

Becoming a CPA

Auditing procedures and standards will need to keep pace with the new IT environment (Gauthier and Brender, 2021), as new accounting systems will be subject to control testing (Sheldon, 2019). Blockchain is still relatively new, with the development of software being rather dynamic; however, figure 6 lists and briefly describes some of the products in the marketplace that attempt to integrate blockchain technology. LONDON, Nov 14 (Reuters) – Fnality, a blockchain-based wholesale payments firm, said on Tuesday it has raised 77.7 million pounds ($95.09 million) in a second round of funding backed by Goldman Sachs and other blue chip financial firms as it awaits Bank of England approval to start operations. The major advantage of blockchain is that the data is shared across the network for verification.

1 Results of LDA analysis

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. The subject of cryptocurrency is complex, and its decentralized nature means there are a number of regulatory issues accountants will eventually have to deal with. Furthermore, governments are typically reluctant to fully embrace financial and monetary changes that they can exert little control over. However, the widespread and growing use of cryptocurrency among organizations of all sizes means accountants need to be able to work with clients who invest in or trade cryptocurrency, and some knowledge of blockchain technology is essential for understanding their motivations and behavior. As an accountancy expert, you’re likely relied upon for your skills in keeping records, ensuring standards are met, and dealing with complex regulations and rules. Because of how trustworthy blockchain technology is, it’s having an impact on how auditing is done.

Blockchain and Distributed Ledger Technology

This allows the function to assume an unlimited distribution; that is, it enables the function to understand values below zero if the data are close to zero, contributing to a better visual result and highlights the discontinuity in the publications’ period (Jacoby, 2000). This study adopts a hybrid methodology, quantitative and qualitative, combining bibliometric and code analysis (Cobo et al., 2011; Massaro et al., 2016). The first step to answering the three RQs was to create a review protocol. According to Hoque (2014) and Tranfield et al. (2003), authors should explain the entire review process to facilitate replication. Therefore, we adopt Massaro et al.’s (2016) model to increase the reliability of the representation of the results. The subsequent paragraphs explain the dataset creation, the tools used to implement the analysis and how the open codes were created.

They bring together authors who currently appear to support blockchain and others who consider the technology harmful to accounting and auditing work. Starting from reports by professionals and literature, they focus limitedly on governance, transparency and trust, continuous audits, smart contracts and accountants and auditors’ roles in the emerging blockchain ecosystem. Our aim with this paper was to define the key topics and trends, past, present and future, that concern researchers in blockchain for accounting. Our analysis systematically identified these topics by analysing 153 relevant papers. By combining machine-learning methods with more traditional approaches, we were able to draw a holistic picture of the critical advances and trends in the corpus of literature. The results indicate that the most widely discussed topics are the changing role of accountants, new challenges for auditors, the opportunities and challenges of blockchain technology application, and the regulation of cryptoassets.

The corpus comprised 153 academic papers from two ranked journal lists, the Association of Business Schools (ABS) and the Australian Business Deans Council (ABDC), and from the Social Science Research Network (SSRN). From this, the authors analysed and critiqued the current and future research trends in the four most predominant topics of research in blockchain for accounting. Following this introduction, the second section presents the details of our SLR methodology and introduces bibliometric visualizations of the 346 included research products. The next section discusses the primary and most impactful contributions on the links between blockchain and accounting and auditing (Section 3.1), finance innovations and the representation of cryptoassets (Section 3.2) and business model innovation and supply chain management (Section 3.3). Finally, the Conclusion highlights our threefold contribution and provides an agenda for future impactful research on blockchain for accounting and auditing.

Why a career in chartered accountancy?

Matter of fact, one of the things that we’re really proud of was the work we did with AICPA and on our stablecoin primer for the accounting professional. To help the accounting profession understand, what’s a commodity token pegged to a barrel of oil? So stablecoins are meant to be pegged to an underlying existing fiat currency or asset.

Just for the audience if anyone owns bitcoins, they’re all, is built off of a blockchain database, just like the stablecoins are. So I actually think we’re in a good state, and I think this is excellent that we can, the firms can start working on this initial use case in a much broader way. There’s been firms doing work in the cryptoasset category, travel agency accounting but now this is going to make it much wider spread. And I think as they understand how to meet the compliance needs related to cryptotax, they’re going to get a better understanding of cryptoassets, the blockchain category. And in some ways this will be a tipping point for them to go into some of the other areas that Ron just mentioned.

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