The Impact of Blockchain Technology in Auditing Deloitte US

blockchain and accounting

Blockchain could have use cases and drive innovation in many sectors, such as those of banking, financial markets, retail, supply chains, healthcare, manufacturing, governance what does encumbered mean in accounting and insurance (Gaur, 2020). In financial sectors, in addition to supporting cryptocurrencies, it offers an opportunity for entrepreneurs who want to create value-reducing financial exclusion (Larios-Hernández, 2017). Second, this study investigates how accounting practice will be impacted by blockchain. Blockchain can improve information timelines and accounting reliability because of its decentralization and transparency, but it will also require new competencies, attention to scalability and accounting standard reconciliation.

blockchain and accounting

It’s immutability and decentralized nature make it unique, but its function of recording transactions makes it familiar to those in the accountancy profession. Developing professional knowledge and understanding of this emerging technology and its applications will be crucial to ensuring the profession’s relevance and future readiness. Against this background, the present study is timely, as it aims to review the existing literature on the use of blockchain in accounting practice and research and to define potential opportunities for further investigation. The main findings related to accounting and auditing (first cluster) are that blockchain immutability is certainly desirable for accountants and auditors and should contribute to the prevention of earnings manipulation and the assurance of information and data.

  1. Blockchain could have use cases and drive innovation in many sectors, such as those of banking, financial markets, retail, supply chains, healthcare, manufacturing, governance and insurance (Gaur, 2020).
  2. To create this form of bibliometric network visualization, VOSviewer uses colors to indicate the cluster to which each node has been assigned considering the cooccurrence relations.
  3. We believe that this study will be a helpful resource for present and future scholars interested in addressing the most meaningful connections between accounting and disruptive applications based on blockchain.
  4. Figure 5 shows a cooccurrence heatmap of the main authors’ keywords (more than five occurrences) in this cluster.
  5. Blockchains and their almost immediate provision of an immutable record of transactions provides for shared transaction information, automatically synchronized across each location.

International Journal of Accounting Information Systems

We chose PRISMA over other existing protocols because of its comprehensiveness, its use in several disciplines worldwide and its potential to increase consistency across reviews (Liberati et al., 2009; Pahlevan-Sharif et al., 2019). In a cooccurrence analysis of keywords, the relatedness of the entries is based on the number of documents in which the keywords occur together. This analysis included any author keywords that were used in at least five publications.

How Blockchain Is Transforming Accounting, Auditing and Finance: A Systematic Review

The chapter offers avenues for future research seeking to develop theory and align theory-practice. We believe that a specific theory to explain accounting blockchains could be drawn from the papers of Cai (2021) and Carlin (2019). They note that blockchain could induce a radical change in the field of accounting, namely, a shift to triple-entry bookkeeping. The advantages of triple-entry bookkeeping are that it increases transparency, reduces the time lag between fact and reporting, facilitates real-time accounting, reduces the possibility of manipulation and allows complete audits of whole recorded populations (Carlin, 2019).

Blockchain in accounting practice and research: systematic literature review

Today, and to a greater extent in future years, ledgers managed by private blockchain monopolists can be replaced with public blockchain systems to offer a better choice to enterprise users and allow companies to use blockchains while maintaining complete data privacy. For instance, we do not consider technical, legal or ethical issues, such as the security and privacy of data or the reliability of information entered in the blockchain. Methodologically, the use of the Scopus database does not allow the analysis of a large number of books or book chapters or non-peer-reviewed studies published on the topic of blockchain in accounting. With Deloitte COINIA, hundreds of thousands of addresses can be loaded in bulk for a variety of crypto assets, and Deloitte can see 100 percent of the transactions and reconcile them to clients’ books and records. Deloitte COINIA also assists with off-chain verification of private key ownership by using an innovative, custom-developed workflow to confirm the integrity of a signed message.

Emerging advances of blockchain technology in finance: a content analysis

The key feature in blockchain is that anything that is stored on the blockchain is there forever, the information is immutable and cannot be erased. The information that is stored on the blockchain offers us a level of transparency that has not previously how to correctly calculate report and reverse accruals been seen. It means that if Person A owns something and transfers the ownership or value of it to Person B there will always be a record in the blockchain that Person A owned it. 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”. Tiscini et al. (2020) explore blockchain adoption as a sustainable business model innovation in the agrifood industry.

Furthermore, if an active market exists, then intangible assets can be valued at fair value (IAS 38.75) (Procházka, 2018; Morozova et al., 2020; Beigman et al., 2021). Although there are some proposals for the use of blockchain in accounting, thus far, none have been commonly accepted. Wang and Kogan (2018) extend the aim of Dai and Vasarhelyi (2017) to solve the trade-off between confidentiality and transparency and propose the use of zk-SNARK (zero-knowledge verification) schemes and homomorphic encryption. In this way, the data stored in a blockchain can be validated and summed without revealing any details.

Distributed ledger technology or blockchain is an effervescent innovation technology that has drawn significant attention from numerous stakeholders, such as financial institutions, energy industries, national policymakers, startups, and academia. Evidence from industrial experience illustrates that blockchain technology has tremendous potential to deliver substantial advantages in the stated domains by pledging transparent and safe platforms, which combined with smart contracts, would allow new management services. This study provides an in-depth review of the basic principles underlying blockchain technology. After a thorough analysis of the literature and existing purchase allowance journal entry scenarios, this study scrutinizes the contemporary blockchain applications employed in the accounting and auditing sector and discusses the prospects and challenges of introducing blockchain technology in the auditing industry with a legal and regulatory lens. There are many questions that need to be resolved regarding the legal and regulatory frameworks for accounting, recognizing, and valuing crypto-assets. The qualitative analysis in this study attempts to understand how blockchain, intertwined with different regulatory dimensions, can play a role in digitizing conventional accounting and auditing systems.

Monitoring what happens in real time rather than testing (selectively) and reconciling what happened in retrospect is a substantial departure from contemporary audit techniques. (2021), “The disruption of blockchain in auditing – a systematic literature review and an agenda for future research”, Accounting, Auditing and Accountability Journal, Vol. Fourth, in our SLR, we underline that the impact of this technology on accountability remains relatively unexplored. In particular, the impact of blockchain on the broader concept of accountability, which includes financial, social and environmental data, is overlooked.

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