The monetary providers business is experiencing a fast transformation, led by the swift growth of latest applied sciences and mixed with the inevitable want for the digitalisation of companies. Blockchain is the underlying expertise that permits cryptocurrency, which has gained a lot consideration in the previous couple of years. The applying of blockchain just isn’t restricted to cryptocurrency, nonetheless, however will also be used to enhance many processes within the monetary providers business and past.
Blockchain is a kind of distributed ledger expertise (DLT), comprising cloud-based networks, storage and databases. DLT permits for transactions and knowledge to be recorded, shared and synchronised throughout a distributed community, consisting of various community individuals positioned in several websites. Blockchain is actually a “chain of blocks”, the place every block represents a set of data. These data could be data of any digital form, similar to private knowledge, monetary belongings and transactions, land titles, property possession and healthcare data.
In blockchain, data is saved and up to date concurrently on all computer systems (nodes) related to the actual community. There is no such thing as a central knowledge storage in a blockchain community and subsequently the reliability lies on consensus via a peer-to-peer course of to confirm and document each merchandise and transaction within the system. This eliminates the necessity for intermediaries or a government to approve these modifications. As soon as a transaction is authorised by the community individuals, the unique document can be left intact whereas the brand new data is added on the backside of the ledger. This course of offers a whole audit path of document mixed with the peer-to-peer verification and cryptographic encryption course of to safe and guarantee reliability of the knowledge.
In a standard accounting system, accounting data are saved in a centralised location or database, both manually or utilizing accounting software program, via which an accountant may have entry to the ledger and enter the small print or replace any modifications within the system utilizing the double-entry accounting system. With blockchain expertise, the accounting document is accessible to all related events by using a triple-entry bookkeeping mannequin. This implies all stakeholders associated to a specific transaction — similar to accountants, auditors, shoppers, banks and regulators — may have an an identical copy of the ledger, which can be up to date on a real-time foundation throughout the blockchain community. The effectivity and safety of blockchain make it a great instrument in accounting.
As blockchain expertise can exchange sure facets of accountants’ jobs sooner or later, similar to bookkeeping, reconciling ledgers and audit routines, the day-to-day duties of an accountant should be reimagined and reshaped. The automation of the routine duties will permit accountants to have extra time for higher-level duties and considering, together with evaluation, analysis and strategy-related determination making, the place the output can add worth for shoppers and companies.
Because the job panorama of accountants evolves, accountants should embrace the change ultimately. The shift of accountants’ function from bookkeeper to adviser requires that they enhance their analytical expertise, together with decoding and decision-making. Having dependable data recorded via blockchain will increase expectations concerning the high quality of their counsel to the stakeholders.
Using blockchain additionally warrants a shift in demand for accountants’ providers, from making ready to valuing or validating, as blockchain’s capability doesn’t span assurance of knowledge credibility, similar to revaluation and amortisation. Thus, accountants are required to use their due diligence in valuing and validating the information saved via blockchain. This will then actually have a knock-on impact on the auditors’ roles, because the audit course of now is determined by the brand new strategies and applied sciences adopted by the audit shoppers.
Though the advantages of blockchain to accountants are obvious, in addition they face challenges. The direct and oblique prices related to blockchain adoption are extra burdensome to medium-size accounting and audit companies, whose shoppers are a mixture of blockchain and non-blockchain adopters. The prices could be important to accountants and auditors, not solely in financial kind but in addition by way of time, therefore the reluctance of small accounting and audit companies to undertake blockchain expertise.
One other problem for accountants is to maintain abreast of blockchain-related skilled developments to own enough information to carry out their duties. Due to this fact, to make sure the integrity of accountants is nicely maintained, blockchain greatest practices should come into impact. Along with skilled our bodies, the colleges, regulators and blockchain technologists are striving to create the most effective practices and expertise pool within the blockchain ecosystem.
Affiliate Professor Dr Nor Shaipah Abdul Wahab at Taylor’s Enterprise Faculty, School of Enterprise & Regulation
Siti Hawa Yusof – Lecturer at Taylor’s Enterprise Faculty, School of Enterprise & Regulation
Taylor’s Enterprise Faculty is the main personal enterprise college in Malaysia, primarily based on the QS Topic Rating 2021 version