Accounting Firms Get Ready for Blockchain Disruption
                     Mainly when we use the term “Blockchain”, then our minds go directly to bitcoin. But, 
blockchain has vast potential than this. Blockchain is the part of Industry 4.0 that has the 
potential to change numerous business practices.
Blockchain is turning out to be an accounting technology as transferring property and 
maintaining ledgers have never been easier before. The role of blockchain in accounting is 
humongous and can be broadly highlighted as –
 It is bringing changes in the business practices and process by impacting the back-office 
activities such as financial reporting and tax preparation.
 With the emergence of blockchain technology, the role and skill set of CPAs and EAs 
have been completely changed. Like, the cloud-enabled data extraction and analysis 
bought a great level of standardization and transparency in the accounting industry.
 It can influence all the bookkeeping process including the way to transaction initiation 
and reporting.
Blockchain Technology Structure!
A blockchain is a digital ledger that is developed to capture the transaction conducted between 
different parties present on the same network. It is a B2B internet based ledger that has the 
potential to record all the transactions since its development. All the individuals or businesses 
present on the shared database are referred to as nodes that are connected to the blockchain. Each
node maintains an identical copy of the ledger.
Every entry made into the blockchain represents a transaction that showcases an exchange of 
value between participants. There are various types of blockchains developed and tested by the 
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programmers by far. But, it’s a basic framework adopted by most of the blockchains. The 
blockchain has a wide range of unique and valuable characteristics that has the capacity to 
transform the accounting industry such as near-real-time, central administrator, distributed digital
ledger and much more.
The key features of blockchain are that:
 Distributed Ledgers: All the transactions originate with a single user but circulate to a 
network of identical ledgers, thus there is no central controller that can influence the 
transaction
 Permanence: all transactions and records are permanent, unable to be tampered with or 
removed; and
 Programmable: many blockchains are programmable, allowing for automation of new 
transactions and controls via ‘smart contracts.
Blockchain in Accounting
The accounting industry has to respond to two aspects for working in blockchain ecosystem;
 Blockchain changes the dynamics of business processes and as the accounting 
department needs to interlink all the business processes, it has to understand the effect of 
blockchain on different business processes.
 Blockchain changes methods of recording, verifying and auditing transactions. Thus the 
accounting department has to adapt to the new methods in the blockchain ecosystem.
This technology has so many different features and functions that have changed numerous things
for CPA firms – for better. Such as –
 Enhance Accounting Profession – Blockchain has the power to uplift the standard of 
the accounting profession by reducing the costs of maintaining and reconciling the 
ledgers.
 The certainty of Assets & Liabilities – Accountants are concerned with measuring 
rights and obligations over the properties and planning for financial resources allocation. 
To respond to this, Blockchain provides certainty over ownership of the assets and 
existence of the obligations that could intensely improve efficiency. It even frees up 
resources of the organization so that the planning and valuation process can be improved.
 Transactional Level Accounting – With the other automation forces such as machine 
learning and artificial intelligence, blockchain will bring more and more transactional 
level accounting, but not by accountants. The professional blockchain accountants will be
those who examine the real economic condition recorded by the blockchain system and 
comparing them with the real market economic conditions.
For example, blockchain made the presence of debtor certain, but it’s recoverability and the 
market value remains undisclosed. Here, blockchain records might verify the ownership, but its 
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location and true worth will remain uncertain wherein accountants can play their role.
 The consensus of the transactions – Blockchain works through a process of consensus 
whereas all the nodes identify the transactions posted by any participant and agree on 
before it takes effect into the ledger. Thus, confirmation and validation automatically 
complete simultaneously with posting. This releases accountants to carry out third party 
verification of historical transactions that sometimes become very hectic and time-
consuming.
 Smart Contracts – Use of blockchain as a platform to host smart contracts automates 
and adds certainty to contractual arrangements and transactions. The potential for self-
executing smart contracts allows for a programmable ledger that could fundamentally 
execute how all contracts operate. This relieves accountants from verifying and validating
contracts and invoices before processing payments processing as all the work is executed 
by the coded programs.
Blockchain in Auditing
Blockchain has numerous applications that improve the external auditing process. When all the 
necessary financial information of a company is presented under the one transaction and it is 
easily visible on blockchains, then this will bring profound changes in the auditor’s work.
When the blockchain is combined with the appropriate data analytics, then this could improve 
the transactional level assortment involved in audit work. This way the skills of auditors will be 
spent on finding a solution for the high-level questions.
For instance, the auditing is not a mere process of checking the detail of transactions like 
between whom transaction was conducted and the amount of money involved, but it is also 
recorded and classified. It will check if the transaction is credited cash – is outflow because of 
the cost of sale or expenses or it is paying credit or creating an asset?
These questions are something that won’t be straightaway answered in the general context of the 
auditing processes, but with the blockchain intervention, it is possible. That’s because the 
transactional work of auditors will be handled by blockchain by giving more time to focus on 
these important questions.
Future of Blockchain in Accounting
There are still so many unknown aspects regarding blockchain impact on the accounting 
profession that are lurking around. However, blockchain is already influencing the CPA 
organizations that are using blockchain to maintain the ledgers by increasing their rate of growth.
In the immediate future, the use of blockchain is still limited in the accounting and financial 
industries. As still, not many blockchain accounting companies are present in the market. But, 
some advanced accounting companies with the futuristic approach has already started using 
blockchain.
If you are looking for an advanced tech-oriented accounting company to handle your work and 
offer you some extra features, then you can visit the CapActix website. For further information, 
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you can mail us at [email protected] or can call on +201-778-0509.
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