In fact, blockchain has entered all walks of life – tourism, insurance, education, banking, investment, government, real estate and so on.
All companies are integrating it into their business processes. Although it is famous for encryption technology, but the technology itself has a wider range of applications.
Since blockchain provides us with a new and undamaged way to store, share and record all kinds of data, is it a perfect match for blockchain and accounting?
It is not far fetched to claim that blockchain is an accounting based technology. Blockchain provides a way to reconcile accounts and record cash flows. It also records transactions and stores assets.
In order to meet regulatory requirements, the accounting industry has been relying on paper and pen to perform transaction and accounting functions.
Accountants are also using cloud based technology, but paper records still dominate the accounting world.
In reviewing the books, auditors need to look at these written records. Moreover, “accounting fraud” is an old problem, so it’s time to find a new solution.
Blockchain provides an opportunity for CPA firms to simplify audit and process, because it provides transparent and immutable records of all data. It helps to ensure the authenticity and accuracy of the data.
Blockchain can be used to improve the traditional accounting work and combat accounting fraud. Due to the immutability of blockchain, it is challenging to use it for fraud. Modifying the records on the blockchain is highly infeasible because participants must make the same changes to all distributed ledger copies at the same time.
Many accountants are excited about blockchain just because it can lead to fewer audits in the future. Auditors can automate most audit functions through the power of smart contracts. Since all content recorded on the blockchain is inherently traceable, auditing can be done quickly and easily. Moreover, because everything is automated, blockchain can reduce the time for auditors to check “account books”.
In order to meet regulatory requirements, institutions have to make a lot of efforts. Blockchain can help ease the burden because it provides enhanced security. As more and more regulators accept this technology, blockchain may even become mandatory in some financial industries.
It’s easier to reconcile
Chores at the end of the month may lighten the burden. Accountants can start to use smart contracts to automate adjustment tasks.
Data entry is probably the most helpful part of blockchain. This is where the human error rate is the highest. Blockchain can automate most accounting functions, thus greatly reducing human error.
increase of efficiency
Blockchain can be designed to be more efficient than legacy accounting software. It is more challenging to input and output data into accounting software. Blockchain is a faster and more robust database.
No matter which system is used, reducing errors and improving efficiency will reduce costs. When transforming from traditional accounting system to blockchain, accounting firms can quickly see cost savings. The initial cost of adoption should be worth it.
Will accountants lose their jobs?
Most people worry about their jobs when they hear about a breakthrough new technology in the industry. In some sectors, there are reasons for concern.
For example, some investment brokers have lost clients because individual consumers now have access to the data they need for their own investments.
But the responsibilities of accountants will not change. However, blockchain will still subvert the industry. Accounting firms and accountants will be able to provide the security of all records to their clients and employers.
Auditors and others who must have access to these records, such as the SEC, will be able to access them. The need for accountants will not disappear, even if their roles change.
Before inputting information into the blockchain, enterprises still need to hire excellent accountants to interpret and classify the information. Accountants will be responsible for the implementation and maintenance of the new system. So accountants don’t lose their jobs.
Bookkeepers don’t either. And not most of the employees in this industry. There is still a need for someone to monitor accounts receivable, prepare invoices, monitor payment contracts, and track revenues and expenditures.
Blockchain makes things better, but it still needs some work. Someone has to enter payments, orders and contracts in the blockchain. Blockchain will make bookkeeper’s dream come true – it will provide transparency, efficiency and permanent records.
Early adopters of “big four”
Due to its potential use, the four major accounting firms have begun to investigate the possible application of blockchain in accounting.
In order to help financial companies explore the potential of blockchain, the company launched the “digital ledger service” project in 2016.
They are also members of the wall street block chain alliance. In addition, KPMG has worked with Microsoft to develop new blockchain applications.
Ernst & Young
The company launched a “blockchain analyzer” in April 2018 to help auditors analyze and review blockchain applications. They are also among the first companies to start accepting bitcoin as a means of payment.
The company is one of the most active professional service enterprises in the field of blockchain technology, and has launched a special project to train more than 1000 employees to use blockchain and cryptocurrency.
PwC also announced a blockchain verification and audit solution for cryptocurrency.
Deloitte is one of the first big brands to join the blockchain. Last year, they launched a mobile platform called “boxed blockchain” to help enterprises demonstrate blockchain solutions.
Blockchain will stay. The application of blockchain will only continue to increase. It will change the way accountants work. Accounting will not become irrelevant; It will become more efficient.
Just as computers and the Internet have changed the workplaces of all industries, blockchain will provide solutions to the problems of the whole industry. Enterprises are currently reassessing their business models and assessing the need to implement blockchain solutions. However, it is important to remember that problems should not be created in order to implement blockchain. On the contrary, blockchain solutions solve the problems of different sectors in different industries and are very powerful in these situations. For departments that have found solutions in other technologies, it may not be necessary to implement DLT.
Responsible editor; zl