How Can Blockchain be Used in Accounting?

As blockchain is an innovation, the financial market also had to learn to value companies that announced that they were pursuing investment in this new technology. The research questions in this area are related to the cryptoassets innovations in finance, whether and how cryptoassets should be reported in financial statements and whether they represent taxable events (Trucíos, 2019; Ram et al., 2016; Ram, 2018). Tiberius and Hirth (2019) confirm that auditors’ expectations align with those of academics, who believe that the role of auditors will not be filled by blockchain technology. Ferri et al. (2020) found that performance expectancy and social influence generally lead to blockchain adoption intentions.

  • While blockchain cannot completely substitute for the roles of auditors and assurance providers, it could play a relatively central role in the context of social and environmental accounting and reporting.
  • Accounting With Blockchain
    Using blockchain technology allows users to integrate accounting into business activities rather than separate accounting from business activities.
  • Figure 2 represents our steps using a PRISMA diagram (Page et al., 2021), which we adjusted to enhance its fit for a qualitative systematic review.
  • This heightened security is especially crucial in the accounting sector, where sensitive financial information requires the utmost protection.

As O’Leary (2019) observes, the opportunities for using blockchain may be limited by the desire and ability of all agents in the ecosystem to implement it. Because blockchain eliminates the need to enter and reconcile information in multiple databases, efficiency gains are a key strength. Blockchain also saves time by increasing the speed of transactions, double entry accounting reducing human error and minimising fraud (Kokina et al., 2017; O’Leary, 2017). The use of smart contracts may also improve processes in a range of industries. Smart contracts on the blockchain execute when certain conditions are met without the need for trusted intermediaries to verify the fact (Coyne and McMickle, 2017; Kokina et al., 2017).

Second, other machine learning techniques could be applied while working with the corpus of literature. Although our LDA approach is much more advanced than mere word count or word cloud methods, it still models documents using a bag-of-words representation. Third, we included articles uploaded to the SSRN database as well as published articles in ranked journals. We are aware that the peer-review process is accepted as a proxy for the quality of published works, especially with respect to academic journal articles (Hart, 1999; Massaro et al., 2015). However, we believe that, given the speed of new knowledge development, especially in the areas of disruptive technologies like blockchain, papers from SSRN added an important contribution to the topics identified. Finally, the validity of the results can only be considered at the time of the analysis, as literature reviews “are not a panacea” (Massaro et al., 2015, p. 546).

When Chartered Accountants Save The World

All this will help to improve transparency further and decrease information asymmetry in the market. Our analysis reveals that more than two-thirds of the papers under review were published in journals, while less than a third represent works in progress uploaded to SSRN. The top accounting journals from the ABS and ABDC rankings appear to be resistant to the blockchain field of research, as they have published only a few papers devoted to the technology.

La Torre et al. (2018) argue that blockchain will generate an automatic assurance system for non-financial information that could substantially modify the current assurance paradigm. Cai (2021) cites three blockchain systems, but these cases were studied when they were within initial commercial rather than working phases. The agile design of Deloitte COINIA also means it can be used today not only for crypto assets but also for a broader base of digital assets, and beyond, as they are supported by the business community in the future.

Finance in a Digital World

It was originally developed to enable the use of the “cryptocurrency” Bitcoin. Many people believe it is the same thing as Bitcoin, which is a digital, portable asset. The concept of blockchain arose before Bitcoin’s implementation and it was was developed primarily to enable the use of Bitcoin.

It also guarantees that the record cannot be manipulated—no one can change the record. This level of immutability is why blockchain technology is commonly referred to as a “trust machine”. This paper provides a compact snapshot of the state of blockchain papers in accounting research. The trends and identified research directions may help predict future citation impact and informed our suggestions for future research.

Trust & Ethics

Thus, our final sample comprised 153 papers on blockchain for accounting. Blockchain is a technology for storing and verifying transactional records that works by adding “blocks” of data to a ledger, called the blockchain, that is maintained across a network of peer-to-peer computers (Coyne and McMickle, 2017). It is a potentially disruptive technology that has begun to have dramatic impacts on the business models and market structures of many industries (Casey and Vigna, 2018), including accounting (Bonsón and Bednárová, 2019; Deloitte, 2016). However, the wealth of information produced about blockchain can make it challenging for researchers to stay up-to-date with the latest developments (Cai et al., 2019; Linnenluecke et al., 2020).

Some authors call for the appearance of a new brand of auditor that can offer attestation services for independent evaluations of blockchain controls (Canelón et al., 2019; Sheldon, 2019). Two of the most widely discussed topics–“the changing role of accountants” and “the new challenges for auditors”–only seem to be getting more popular. Although “new skills for teams” began to attract attention in 2019, papers on this topic still only account for a small portion of the sample.

Blockchain for Accounting: A Comprehensive Guide for Businesses

Accounting With Blockchain
Using blockchain technology allows users to integrate accounting into business activities rather than separate accounting from business activities. This is achieved via a triple entry accounting system that, essentially, maintains three ledgers, one each by the seller, the buyer and a public set of (cryptographically authorized) records. The public set represents virtually irrefutable evidence of the underlying transactions.

Three examples of Blockchain in Accounting fails

Blockchain technology enables financial, property and value chain transactions worldwide. Initially developed to serve the establishment of Bitcoin, major corporations and the AICPA believe that blockchain’s independence, verifiability and distributed ledger methods have the potential to transform international business and economic growth. Blockchain is seen as a disruptive technology, in which accounting and bookkeeping jobs are anticipated to change greatly over the next few years. Currently in the development stages, more than 30 major companies are offering blockchain solutions for businesses in the United States and around the world. Blockchain technology is the underlying technology that traditional decentralized cryptocurrencies are built on, which allows for a secure and transparent form of digital currency.

The future is calling: blockchain’s impact on the accounting profession

Hence, we also manually reviewed the 15 articles identified in the LDA analysis as the most representative of each topic. This review affirmed the results of the LDA analysis and gave us the opportunity to offer a critique and gain more insights while identifying future research directions. The success of cryptocurrencies has enticed entrepreneurs, academics and practitioners to study their innovative underlying technology, the blockchain and its opportunities in many different sectors.

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