Blockchain and accounting
Blockchain technology will reshape virtually every corner of the accounting world, changing the way of working, where to do it and how to connect with clients. The nature of tax and audit services will rapidly evolve into something so different that it will force professionals to renew themselves at an extraordinary pace and depth. The blockchain is said to be the most important advance in recordkeeping since the invention of double entry bookkeeping more than 500 years ago.
With blockchain, all of the participants in any business ecosystem can have in shared ledgers of the details of every transaction that gives rise to accounting entries. The shared ledgers becomes a single source of truth for every player.They can also provide read-only access to authorized external entities such as regulators and auditors who can instantly and automatically verify and validate those transactions for reporting or other regulatory purposes. As a result, audits will become much more analytical, at least semi-automated, and even continuous.
This technology will therefore have a huge impact on the accounting and auditing professions, both for external auditors and for internal accountants and auditors. It forces to rethink how the accounting and auditing processes have to be developed in organizations. And when the blockchain is joined with data analysis and artificial intelligence, anomalies can be uncovered in real time, without the need to wait until the end of the month, quarter or year.
The need to paw through file cabinets or double check sample transactions will disappear to discover that a fraudulent transaction was made months ago. Material misstatements and financial irregularities can be detected and corrected as soon as they occur, and in many cases prevented entirely.
There will still be jobs for human auditors, but the nature of those jobs is going to be very different. People will apply business analytics not only to manage risks but also to identify opportunities. Accountants and auditors who understand, monitor, and improve analytical and cognitive systems and processes are the ones who are going to thrive.
Their role will shift away from after-the-fact scorekeeping to evolve towards the automation of accounting and auditing and the design of business analytics and monitoring systems. And they will continue to evaluate the underlying assumptions and estimates, but given that their work will fundamentally be based on analytical knowledge, it will not require as many professionals but a few much more skilled in the use of analytical tools of various types.
For all these reasons, the impact impact on accountants and auditors will be very positive. Blockchain will enable changes that will improve auditor productivity and allow them to spend more time exercising their professional judgment. This will provide greater insights into operations, trends in customer behaviour, and other key business factors, which will make the job much more rewarding.