However, the ability to trust that both parties are recording the same base transaction information and the real-time availability of this accounting data offers immense benefits for the efficiency with which accounting data can be reconciled and analyzed. The agile design of Deloitte COINIA also means it can be used today not only for crypto assets but also for a broader base of digital assets, and beyond, as they are supported by the business community in the future. These can include supply chain tracking, digital rights management, real estate title transfer, and other forms of real-world asset digitalization. Deloitte COINIA is an extension of Deloitte’s award-winning Cortex platform, a cloud-based data platform that harnesses the power of data by securely and seamlessly integrating data acquisition with data preparation and analytics. It combines advanced technology with business processes to generate meaningful and valuable insights in a repeatable and consistent fashion. Accountants can leverage automated smart contracts to streamline tasks such as revenue recognition and invoice processing, freeing up time for strategic analysis.
For example, due to the potential risks of disclosing information, we assume that blockchain will have a more restrictive effect on business entities than non-profit organisations, because non-profits tend not to hold as many commercial secrets. Blockchain is a technology for storing and verifying transactional records that works by adding “blocks” of data to a ledger, called the blockchain, that is maintained across a network of peer-to-peer computers (Coyne and McMickle, 2017). It is a potentially disruptive technology that has begun to have dramatic impacts on the business models and market structures of many industries (Casey and Vigna, 2018), including accounting (Bonsón and Bednárová, 2019; Deloitte, 2016).
This feature revolutionizes how accounting data are accessed as it allows all actors in the chain to obtain history, real-time updating and final reporting. This subsection aims to analyze the technical types of blockchain, according to O’Leary (2017). For the accounting, auditing and accountability sector, 16% consider blockchain creation with hybrid structures. For instance, Rozario and Vasarhelyi (2018) identify hybrid models as holistic models capable of including both internal and external centralized audit procedures. Besides, starting from the need to respect corporate data privacy, Schaefer and Edman (2019) propose a hybrid architecture governance without public or private authorization.
The most frequently cited paper in this area is that of Dai and Vasarhelyi (2017), which entered triple-entry bookkeeping into the academic discussion on blockchain and accounting. Their idea comes from Grigg (2005), who proposed a third entry recorded by a trusted third party that stores a receipt to which both parties involved in a transaction agree and digitally sign. In a cooccurrence analysis of keywords, the relatedness of the entries is based on the number of documents in which the keywords occur together. This analysis included any author keywords that were used in at least five publications. We used a thesaurus file to merge similar keywords (e.g. “audit” and “auditing,” “cryptocurrencies” and “cryptocurrency”). The keywords were grouped into clusters, namely, sets of closely related nodes within a bibliometric network.
Implications and future research questions
Hopefully, this SLR will serve as a helpful baseline for practitioners, professionals and academics as we navigate the next potential revolution in accounting information systems. A blockchain-based supply chain process could facilitate instant tracking, preserve privacy through a private chain with preauthorization, reduce costs related to updating information, enable automatic payments and, in general, improve automation (Chang et al., 2019). This is particularly interesting in the context of the energy sector, where renewable energy and carbon credits are intangible tradable items.
- This means they are taking blockchain more seriously and that it might be a good idea for you to as well.
- Information will no longer need to be aggregated and stored in central databases as it will be stored everywhere at once and, if desired, under direct user control rather than the company offering the service.
- Some authors (Chang et al., 2019; Kumar et al., 2020) suggest that future supply chain systems will be formed through integrations of blockchain into current systems, and a hybrid system with public on-chain data and private off-chain data will be used.
- As more and more organizations explore the use of private or public blockchains, CPA auditors need to be aware of the potential impact this may have on their audits as a new source of information for the financial statements.
- In a triple-entry accounting system, a debit, credit, and a third entry is recorded.
Almost 12 years later, the uses of blockchain are innumerable and involve different business sectors. Its effects and benefits have also been studied by accounting, auditing and accountability literature. Guthrie et al. (2019) state that many challenges lie ahead, especially in technology. In this sense, Arnaboldi et al.’s (2017) study also notes that the technology revolution will change organizations, individuals and accounting through increased automation.
2 Defining a set of articles for further analysis
First, in this research area, the articles are primary qualitative and use, especially, discursive analysis. Therefore, it opens the possibility of significant challenges for future researchers in testing new methods. To deepen the analysis, we define a reliable framework (Biancone et al., 2019b; Dal Mas et al., 2019; Dumay and Cai, 2014; Guthrie and Abeysekera, 2006; Kotb et al., 2020; Massaro et al., 2016). All the analyses are based on the classification of nodes’ group, which aims to guide the readers addressing the aims of this study (Dal Mas et al., 2019). According to Massaro et al.’s (2016) methodological paper, reviews should adopt a coding framework for analyzing articles.
The power of blockchain
Auditors could extend their services to work as accounting blockchain information systems administrators or advisors (Bonyuet, 2020). 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. Blockchain technology’s transformative potential extends beyond theory, as demonstrated by its successful implementation in various real-world scenarios. This means that it’ll also save you and your bookkeeper tons of time while also making it easier to audit your own financial records. If an organization modifies a transaction’s data in the blockchain, it’ll affect the hash value.
Real-time transaction processing and accessible audit trails provide business owners with accurate insights into financial activities, enabling informed decision-making. With transactions being recorded in a shared and unalterable ledger, the need for time-consuming manual reconciliations is significantly reduced. This shift enables accountants to focus on more value-added activities, such as data analysis and strategic financial planning. At its core, blockchain is a distributed and decentralized digital ledger technology that enables the secure recording and verification of transactions across a network of computers. Unlike traditional centralized systems, where a single entity controls the ledger, blockchain operates through a consensus mechanism among participants.
Although “new skills for teams” began to attract attention in 2019, papers on this topic still only account for a small portion of the sample. Interesting, even over such a short period, interest in some topics is already waning, e.g. “FinTech in banking”, “cryptocurrencies and cryptoassets”, and “blockchain and taxation”. With this in mind, and given the overwhelming interest in just a handful of topics, we focused the rest of our analysis on the top four topics. We believe that a specific theory to explain accounting blockchains could be drawn from the papers of Cai (2021) and Carlin (2019).
2 Implications for accounting practice
Hence, if transparency is key, implementing blockchain may help to enhance a company’s competitive advantage (Deloitte, 2019), and it should certainly help to cultivate trust between market participants (Yu et al., 2018). In blockchain, the transaction verification process is not managed centrally. Rather, it involves all the computers in the network, so blockchain does not suffer from point of failure events.
(2020), “Challenges when auditing cryptocurrencies”, Current Issues in Auditing, Vol. Christ and V Helliar (2021) show that blockchain also makes it possible to monitor workers’ rights, but there are some privacy concerns that must be addressed. If buying and selling cryptocurrencies was part of the ordinary business of an entity, then it would be possible to account for cryptocurrencies as inventory. 9 states, “Inventories shall be measured at the lower of cost and net realizable value,” and if a company is a broker-trader, then it can value cryptos at fair value less cost to sell (Procházka, 2018; Morozova et al., 2020).
By storing biometric data on a blockchain, refugees gained secure access to food distributions without the need for physical documents. This innovation promotes privacy, reduces fraud, and empowers vulnerable populations. If this subject interests temporary accounts you, understanding closing your books will help you more easily see the promising value of blockchain. During an audit, an accounting professional can easily confirm that a transaction happened, but the transaction details aren’t recorded.
Further, the ways of creating effective smart audit contracts and smart reporting contracts should also be studied with a special focus on executing traces and enforceability (Schmitz and Leoni, 2019). Implementing blockchain may benefit most accountants and auditors, but it may be negatively perceived by those who work in the black economy, those who are keen on earnings management, and those who need to manipulate the appearance of illicit transactions. Therefore, we assume that automating data collection and storage using blockchain will not mean the auditing profession disappears. Rather, we see it evolving into a new role within companies and the ecosystem of blockchain accounting. What could be an even more profound transformation of the profession is how the work of accountants might no longer involve only recording transactions. In future, accountants may need to provide professional judgements during the accounting process (McGuigan and Ghio, 2019; Dai and Vasarhelyi, 2017).