The implementation of the technology involves addressing significant challenges, but also has numerous potential advantages. When implemented correctly, the blockchain provides a high degree of trust, which some accountants worry will reduce demand for traditional accounting work. However, with the blockchain comes a number of additional demands, especially as it becomes more and more embedded within mainstream finance. Along with data analytics and machine learning, the blockchain will make some more tedious tasks easy to automate, but accountants will be needed to ensure accuracy and provide the analysis of the information their employers or clients need.
3 Opportunities and challenges of blockchain technology application
Further, the monitoring role of accountants in managing information for the benefit of stakeholders will need to be established (Zhang et al., 2017). However, Alles (2018) warns that there is a danger of the “empirical takeover” effect when papers become empirically driven. Thus, there is a need to establish a solid theoretical and conceptual background for how blockchain will disrupt accountancy. 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.
Statutory regulated services overseen by ICAEW
Addressing such changes in education through content and delivery is necessary to ensure that graduates have up-to-date and workplace-relevant knowledge and can keep up with global accreditation standards and professional qualifications (Al-Htaybat et al., 2018). Teams, management and government bodies implementing blockchain and making decisions based on data obtained from blockchain will also need new skills to adapt to the changing environment (Pimentel et al., 2019; Siew et al., 2020). Therefore, we propose that universities and higher education institutions should change and improve the curriculum of accounting and finance programmes to help students develop the above-mentioned skills. It is essential to start making the changes now as current students will soon become accounting and auditing practitioners as well as managers working with blockchain and other disruptive technologies. Of course, for blockchain technology to enable continuous auditing and for it to give auditors a better understanding of their clients‘ businesses, companies will need to record all transactions on the blockchain (Schmitz and Leoni, 2019). After all, “real-time auditing” can only be delivered to the degree that transactions are recorded on the blockchain.
International Journal of Accounting Information Systems
Even though, for most industries, blockchain is still a new and not yet well-established technology, the World Economic Forum estimates that, by 2025, at least 10% of global gross domestic product (GDP) will rely on blockchains. And, by 2030, blockchains will have created $3.1tn in business value (Panetta, 2018). It should therefore be unsurprising to consider that this revolution will start to change the nature of accounting and, in turn, the work of its practitioners and theorists (e.g. Yermack, 2017; Schmitz and Leoni, 2019; Yu et al., 2018).
Furthermore, governments are typically reluctant to fully embrace financial and monetary changes that they can exert little control over. 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. Even though we anticipate that blockchain will influence accounting and auditing, we do not assume they will be totally replaced.
- When conducting an SLR, it is important to assemble a proper body of literature so as not to bias the results (Massaro et al., 2016).
- Thus, many of the benefits and challenges of blockchain for auditing still need to be analysed.
- At the same time, these innovations can create a favourable organisational climate that can overcome barriers and resistance to change (Clohessy and Acton, 2019).
The main advantage of blockchain technology is that once a transaction is approved by the nodes in the network, it cannot be reversed or re-sequenced. The inability to modify a transaction is essential for the blockchain’s integrity and ensures that all parties have accurate and identical records. Because blockchain is a distributed system, all changes to a ledger are transparent to all the members of a network. Make sure you’re ready for the changes that digital technologies are bringing to finance functions and accountancy work. Complete eLearning, watch webinars and read bite-sized summaries on the opportunities and challenges brought by automation, artificial intelligence and big data.
It is important to note that organizations can control access to the data, both in terms of who can access the data and what data can be accessed. The literature review reveals a pressing need for legal frameworks to govern blockchain technologies and regulate cryptoassets. Comprehensive work by regulators and policymakers may help implement and spread these technological innovations further, opening new sources of financing for companies. There is also a need to work on legal and taxation policies for tokens, bitcoins and other cryptocurrencies so that they become valuable tools and stable assets in capital markets. With the improved regulatory framework, we also propose that in the future governments may develop national cryptocurrencies, e.g. crypto-euros or crypto dollars, that will be easier and faster to use compared to existing currencies.
Most expect that these professions fair value vs fair market value will be augmented rather than fully automated, and the need for accountants and auditors will not disappear (Agnew, 2016; Marrone and Hazelton, 2019). There will still be a need for professional judgement, and, further, issues such as reconciliation are almost impossible to perform at the current stage of blockchain’s development. In line with McGuigan and Ghio (2019), we argue that accountants will not only have to understand the data on blockchain, they will also have to interpret and explain the implications of this information to management and other decision-makers. As a result, accountancy is likely to become a much more strategically oriented profession. Researchers should analyse how blockchain ecosystems evolve and are applied (Benjaafar et al., 2018).
Accountants will not need to be engineers with detailed knowledge of how blockchain works. But they will need to know how to advise on blockchain adoption and consider the impact of blockchain on their businesses and clients. They also need to be able to act as the bridge, having informed conversations with both technologists and business stakeholders. Accountants’ skills will need to expand to include an understanding of the principle features and functions of blockchain – for example, blockchain already appears on the syllabus for ICAEW’s ACA qualification. These judgemental elements often require context that is not available to the general public, but instead require knowledge of the business, and with blockchain in place, the auditor will have more time to focus on these questions. Ablockchain solution, when combined with appropriate data analytics, could help with the transactional level assertions involved in an audit, and the auditor’s skills would be better spent considering higher-level questions.