The accounting and finance domain is currently experiencing a fast-track mode where crucial role is played by the ongoing technological advancements. This is acting as a pivot to professional accountants for management and processing of high throughput financial data. Blockchain technology originally developed for cryptocurrencies such as bitcoins, emerged as a trending system and gaining popularity in various industrial sectors and becoming a changing force in the metamorphosis of accounting arena per se. In this article, we will explore the impact of blockchain technology on accounting practices, its benefits, challenges, and the future it holds for the field. Cryptocurrency like bitcoins emerged as a new intangible transaction mode using digital currencies which is currently lacking a method to be accounted for under U.S. generally accepted accounting principles (U.S. GAAP). Let us discuss the pros and cons of blockchain technology and its future impact in professional accounting domain.
Increased Lucidity and Confidence in Accounting
Blockchain technology offers an unchangeable and scattering form of ledger system to make the transactions more transparent and secured. An accountant can record every financial transaction on the blockchain, creating a transparent and auditable trail of data. It provides real-time access to the same data by all concerned persons in a trustworthy manner without any intermediate stage.
Sleek Auditing and Compliance
Blockchain technology brings cost effectiveness and efficiency in traditional auditing practice which is a time-consuming process otherwise. Blockchain technology, thus streamlining the auditing by making it error free and eliminating the need of manual verification steps. This has major impact on increased compliance with various regulatory criteria.
Automation in Accounting
Blockchain technology, through its smart contract mode can automate the repetitive daily jobs like preparation of invoices, settlement of payments etc. in an error free manner. This helps the qualified and skilled accountants to focus on more high value chore like strategic decision making rather than routine accounting procedures.
Automation in Accounting
Blockchain technology, through its smart contract mode can automate the repetitive daily jobs like preparation of invoices, settlement of payments etc. in an error free manner. This helps the qualified and skilled accountants to focus on more high value chore like strategic decision making rather than routine accounting procedures.
Data Security
Since Blockchain technology is based on decentralization and cryptography, every transaction is encrypted and linked with the previous one chain wise which makes it difficult to tamper thus facilitates enhanced protection preventing data fraud in the system.
Cost effective
Blockchain technology bypasses the various manual intermediary steps in accounting thus providing efficiency and huge reduction in the accounting cost by automating the routine accounting jobs as well.
Challenges to Overcome
It must be kept in mind that the Blockchain technology is quite new and is still evolving. So, obviously certain obstacles are likely to be there that need consideration to overcome. Since a struggle is there with processing speed of high through put transaction data, scalability of Blockchain is currently a challenge. Moreover, effective amalgamation of blockchain technology with the traditional accounting system is also a point of concern regarding compatibility and compliance with the regulatory systems. The induction of cryptocurrency in accounting is also an issue to be resolved.
It is evident that induction of Blockchain technology with its enormous benefits can be a threat to disrupt the conventional accounting practice. Since Blockchain provides enhanced transparency, streamlined auditing, automation, data protection and storage, elimination of fraud in a cost-effective manner, the entry of Blockchain in professional accounting field is only a matter of time. Despite certain challenges, the potential of Blockchain technology in accounting cannot be ignored. We must keep it in mind that the Blockchain technology is still evolving in a great pace. To cope with this, accountants and financial professionals must upgrade themselves to adapt and accept the metamorphic might of blockchain to stay afloat above others in the ever-changing sea of accounting and finance.
Nowadays all international professional bodies like the IMA US or AICPA are providing courses on Blockchain and Cryptocurrency once you be their registered member and pursue courses like the CMA US or CPA US .
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