Perhaps you’re an expert on blockchain technology, you’ve never heard of blockchain technology, or you’re somewhere in between. Regardless, it’s landed on the beach and it’s here to stay. Given blockchain’s growth in importance and use, strategic discussions on this technology have been taking place for quite some time. In fact, very recently, more than 60 accounting firm leaders and innovators gathered for a symposium that was hosted by the Association of International Certified Professional Accountants and CPA.com. The focus was on the impact of the technology in accounting, auditing, tax, and finance.
The rise of blockchain technology has led to a need for more understanding in the CPA profession, sparking the Blockchain in Accounting Symposium that took place on May 2. Being part of a larger collaboration with the Wall Street Blockchain Alliance, a leading nonprofit trade association promoting the adoption of blockchain technology across global markets, the event addressed the implications for the accounting profession.
“The Wall Street Blockchain Alliance is proud to be part of this accelerating effort to guide the evolution of the global accounting profession in a future with blockchain technology,” said Ron Quaranta, chairman of the group. “Across the range of accounting workflows, from auditing to tax, financial reporting and beyond, we look forward to our continued joint efforts to advance the world of accountancy and its use of blockchain technology.”
So, what is blockchain and how does it work? It’s an open, decentralized, transparent, distributed ledger that records and verifies transactions without any central authority. And since accountants often work in the verification business, this technology might transform our profession more than any other. Literally, any of the back-office processing functions could theoretically be displaced by blockchain. Susan S. Coffey, CPA, CGMA, executive vice present for public practice for the AICPA commented, “We expect blockchain will impact all areas of practice.”
Human error is a leading cause of accounting mistakes. According to AccountingWEB, nearly 28 percent of professionals reported that people plugged incorrect data into their firm’s enterprise system. To that point, Deloitte’s white paper Blockchain Technology: A game-changer in accounting? states, “The recently emerged Blockchain is a trustless, distributed ledger that is openly available and has negligible costs of use. The use of the Blockchain for accounting use-cases is hugely promising. From simplifying the compliance with regulatory requirements to enhancing the prevalent double-entry bookkeeping, anything is imaginable.”
So, is it important now? Byron Patrick, Managing Director of Network Alliance and 2013 MACPA Chairman of the Board proclaims, “Accountants need to familiarize themselves with the technology so they can trust the data it produces. There’s no question that blockchain will have a significant impact on the accounting profession. The underlying technology addresses many of the security and privacy challenges that been major vulnerabilities in the existing technologies we use today. Having a foundational technology that speaks directly to the concerns of accountants … data integrity, trust, and privacy … solutions will be created that will enable reliable data for all types of business information that goes far beyond currency.”
Far beyond currency, indeed. Don Tapscott, in his book called The Blockchain Revolution, makes the point that almost anything you can transmit electronically–which is almost everything today–can be securely transmitted, accounted for and verified via a blockchain. That’s deeds, mortgages, stocks, transactions, inventory–all of that is ripe for blockchain.
“Technology is nothing. What’s important is that you have a faith in people, that they’re basically good and smart, and if you give them tools, they’ll do wonderful things with them.”–Steve Jobs