The Accountants’ Relationship with Blockchain
As trusted advisors within the industry, Chartered Professional Accountants should have an awareness and an understanding of emerging technologies. Blockchain is one of the latest buzzwords and, according to Forbes, can be seen as a technology based on accountancy.
What is blockchain?
A recent article, How Will Blockchain Change the Future of Finance and Accounting?, defines blockchain as:
Blockchain is a system that records details of transactions made using cryptocurrencies such as bitcoin. It stores this digital information in a shared database where both parties in a transaction have access. As both parties have access to a single ledger, there is no need for a third-party company, and therefore no risk of additional charges imposed by these companies. Blockchain technology also makes the process faster, more reliable, and more efficient.
Blockchain within the accounting profession
Ultimately, blockchain could help accountants achieve clarity over the available resources and obligations, while freeing up time to concentrate on planning and valuation instead of recordkeeping. According to a report published by the Institute of Chartered Accountants in England and Wales, blockchain could dramatically improve efficiency for accountants. The report says that blockchain has the potential to “reduce the cost of maintaining and reconciling ledgers and provides certainty over the ownership and history of assets”.
How the profession can lead with blockchain
Accountants are seen as experts in record keeping, application of complex rules, business logic and standards setting. That said, the move to a financial system with a significant blockchain element offers many opportunities. For example, accountants would have the option to work as advisers to companies considering joining blockchains themselves. This would involve giving advice on the potential drawbacks and advantages of the new system to companies approaching looking to leverage the technology.
That said, Gartner research outlines that experts predict we will see blockchain lead us into a new era of accounting at some point in the future.
Accountants will not need to be engineers with a detailed knowledge of how blockchain works. Instead, they will need to know how to advise on blockchain adoption and consider the impact of blockchain on their practice and the business of their clients.
To continue learning more about blockchain, read a blog by Caseware IDEA.