Since the invention of the blockchain technology with Bitcoin, accounting has never been the same. Blockchain deals with the transfer of ownership of assets as well as maintaining accurate financial information on ledgers. Even though that explanation is quite basic it goes to show that the accountancy field is going to be directly affected by this new cryptocurrency technology.
Accountants are extremely interested in discovering rights and responsibilities over property and creating strategies that allocate a company’s financial resources in the best way possible. With blockchain the exact ownership of assets and obligations can never be questioned by accountants and allows them to handle the financial resources more efficiently. Accountants have more time to spend on planning and valuation since the time needed for maintaining and reconciling ledgers is dramatically reduced.
With the automation that blockchain brings by providing certainty over transaction history and eliminating reconciliations it has definitely increased the scope of accounting. Certain areas of a businesses accounting that were once considered unmeasurable or extremely difficult to gauge can now be appraised, such as putting an exact number to the value of the data a company possesses.
Many accountants see blockchain technology as the successor to the popular bookkeeping and reconciliation work they are used to. This has caused concerns for the future employment to those accountants that rely on their bookkeeping expertise and are unable to provide value in other accounting areas. Accountants are no longer considered to be just number crunchers and are required to be able to spend a majority of their time providing advice and judgement factors on the value of all of the company’s’ assets.
Everything in accounting that deals with transactional processes and transferring the rights of property is completely changed when dealing with blockchain technology. There is almost no need for dispute management since the certainty on the rights to property and obligations is greatly increased. Accountants will now focus on how to account for and consider the transactions along with expanding on what areas of the transaction process can be valued and accounted for.
Change to Accounting Skills with Blockchain Technology
Blockchain along with other new technologies like data analytics will optimize the processes in even the most traditional accounting departments. This is going to cause a change in the spectrum skills that have been represented in the past for accountants. Advisory, technology and other value-driven activities are going to be expanded while the proving ownership and reconciling ledgers work will become almost obsolete. The accounting functions are becoming more and more valuable and efficient since the introduction of blockchain.
There is a change on what auditors will focus on when conducting financial audits on a company with an abundance of blockchain-based transactions. It is unnecessary to track down and confirm with all of the external sources on the accuracy of blockchain transactions since it is a trustless system. Auditors will focus on how these transactions were recorded and identified in financial records and what kind of subjective factors were used in deciding their valuations. As more and more transaction records are being converted to blockchain technology auditors will have real-time access to monitor the transactions with no doubt to their certainty.
What Accountants Need to Know About Blockchain Technology
While accountants do not need to know the in-depth knowledge on how blockchain was engineered and how it works they do need to be able to have a clear idea as to the pros and cons of the technology. Executives will turn to the accountants for advice on whether or not to adopt blockchain as well as explaining the impact it will have to their business when dealing with clients. Accountants need to be able to explain this information to both business owners and technicians so it is clearly understood. As an example, in order to earn the ACA qualification they will need to be able to communicate the principle features and functions of the blockchain technology
The blockchain technology is still considered to be a fairly new concept that is still in its adoption stages but it is already shapeshifting the nature of accountancy. This is already delivering both opportunities and challenges to accounting so it is important that all CPA’s understand the technologies implications and possibilities to be properly prepared for how business transactions are handled in the future.