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Accounting and Auditing Impact of Blockchain Technology

Any new technical opportunity is initially viewed as a difficulty, and blockchain-based solutions are no exception. The new perspectives that have been brought about by this digital transition are immense and yet to be exploited, opening more opportunities for consulting services in their nascent stage. Consultants, particularly accountants and auditors, should be prepared and equipped to adapt blockchain-related changes in their respective zones, which are expected to begin soon.

What does blockchain technology imply?

A blockchain is simply a public ledger that records and stores groupings of transactions or events in a chain-like data structure (Simoyama, Grigg, Bueno, and Oliveira 2017). Blocks are transaction groupings that are arranged on the chain by transaction time. Later blocks are added to the end of the chain while the prior block’s hash is preserved (Crosby, Pattanayak, Verma, and Kalyanaraman 2016). 

A blockchain is a digital record of transactions that is maintained and disseminated over a network of digital platforms, such as computer systems, that are active on that blockchain. Because of its excellent feature that prevents altering of the preserved information or network hacking, blockchain systems are becoming more popular to keep data. Blockchain technology, often known as a digital ledger of data or a chain of information, has been popular for some time, owing to the creation and acceptance of cryptographic assets, such as bitcoins.

What does blockchain technology imply?

A blockchain is simply a public ledger that records and stores groupings of transactions or events in a chain-like data structure (Simoyama, Grigg, Bueno, and Oliveira 2017). Blocks are transaction groupings that are arranged on the chain by transaction time. Later blocks are added to the end of the chain while the prior block’s hash is preserved (Crosby, Pattanayak, Verma, and Kalyanaraman 2016). 

A blockchain is a digital record of transactions that is maintained and disseminated over a network of digital platforms, such as computer systems, that are active on that blockchain. Because of its excellent feature that prevents altering of the preserved information or network hacking, blockchain systems are becoming more popular to keep data. Blockchain technology, often known as a digital ledger of data or a chain of information, has been popular for some time, owing to the creation and acceptance of cryptographic assets, such as bitcoins.

What role does blockchain technology have in accounting?

Blockchain technology proposes a novel method of storing and accounting for transactions that eliminate the requirement for the time and effort required to maintain traditional ledgers. Using the fundamentals of this technology, the entire approach to bookkeeping can be computerized. Another advantage of this accounting transformation is that it saves time, effort, and resources that would otherwise be necessary for many ledger reconciliations.

At the application level, blockchain opens up new opportunities for auditors, such as analyzing specific transactions, validating the existence of digital assets, and attesting to the consistency of data on a blockchain and in the real world. Auditors must draw on their experience with IT system audits to devise unique approaches for verifying ownership. Auditors will no longer need to wait for trading parties to supply data and papers because a blockchain stores a complete record of transactions. Blockchain will go beyond the usual audit sampling procedure, allowing for continuous audits of all “on-chain” transactions throughout any time period.

Perspectives and Recommendations

Auditing professionals must change and elevate themselves to the role of a strategic partner in order to prepare for the changes brought on by this disruptive technology (Karajovic, Kim, and Laskowski 2019). Auditors should consider the following basic steps to adjust to the new environment:

  • Gain knowledge of blockchain technology and blockchain governance. Auditors should be able to assess the costs and benefits of implementing certain blockchains for their clients, as well as provide recommendations on how to do so (Sheldon 2019). By altering their hiring and training strategies, audit companies could achieve this goal.
  • Take part actively in blockchain development with a focus on risk management. Auditors should the initiative to influence and lead blockchain implementation. Audit firms should shift their focus on evaluating risk management effectiveness and providing solutions and assurance for internal control.
  • Auditors have a lot of options thanks to rapidly growing technologies. Auditors should evaluate the following long-term prospects in order to promote high-quality services:
  • Make the switch to continuous auditing. Because of real-time access to transaction logs, blockchain applications allow for ongoing auditing (Smith 2017).

How can we help?

Have more questions about accounting in Blockchain technology? For Blockchain accounting, contact Alya Auditors. Alya Auditors have always emphasized its ability to assist clients in a variety of industries by delivering bespoke consulting services. With a variety of supporting activities, we are delighted to assist you in embracing the possibilities of blockchain technology and its reforms.

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