The blockchain technology can revolutionize several industries and is arguably one of the most discussed technologies of 2018. It has set up the curiosity among various industries and sectors, especially in finance. Blockchain offers a new way to store and share data. The blockchain technology in an accounting technology is active with the transfer of ownership of assets, and it even maintains a ledger of accurate financial information. This technology has the potential to enhance the accounting profession by reducing the costs of maintaining and providing an absolute certainty over the ownership and history of assets.
By providing certainty and eliminating reconciliations over transaction history, the blockchain technology increases the scope of accounting and brings more areas into consideration that are presently unreliable to measure, such as the value of the company’s data. The blockchain technology is a replacement for reconciliation and bookkeeping work. In this article, we will see that how blockchain technology can change the future of the accounting industry.
The current State Of Accounting And How Blockchain Can Change It
In the business of accounting, everything is about automation. If there is a task that is still performed manually then it is clearly costing companies time. To achieve the daily targets, the majority of the industry still relies on mutual control mechanisms. This affects day to day operations. The modern financial accounting is based on a double entry system. As the double entry bookkeeping solves the problem of managers like knowing whether they could trust their own books. However, to gain the trust, the independent public auditors have to verify the company’s financial information. This process of auditing is costly and it binds the company’s accountants for long time periods.
While using the blockchain technology, instead of keeping separate records based on transaction receipts, companies can write their transactions directly into a joint register. This can create an interlocking system of permanent accounting records. As all entries in the blockchain-based system are cryptographically sealed and distributed. Therefore, chances of manipulating or destroying them to conceal activity are practically impossible. This process is exactly similar to the transaction process that a notary verifies but in an electronic way. The blockchain will allow auditors to verify a large number of data in a short period of time. The use of blockchain technology can even considerably decline the cost and time that is necessary to conduct an audit.
Association Of The Blockchain Technology For Auditors
Advantages Of Blockchain Technology In Accounting Industry
Future Of Accounting With The Help Of Blockchain
Conclusion
The blockchain is a new perimeter for the accounting. This technology is here and it is only going to get bigger day by day. The one who starts using this technology for their business early will always have the upper hand. The blockchain can revolutionize the core infrastructure systems of accounting industry around the globe by bringing in greater efficiency and transparency. There are many blockchain development companies like Openxcell, that is enhancing the use of this technology by developing blockchain-based apps for various industries.
By providing certainty and eliminating reconciliations over transaction history, the blockchain technology increases the scope of accounting and brings more areas into consideration that are presently unreliable to measure, such as the value of the company’s data. The blockchain technology is a replacement for reconciliation and bookkeeping work. In this article, we will see that how blockchain technology can change the future of the accounting industry.
The current State Of Accounting And How Blockchain Can Change It
In the business of accounting, everything is about automation. If there is a task that is still performed manually then it is clearly costing companies time. To achieve the daily targets, the majority of the industry still relies on mutual control mechanisms. This affects day to day operations. The modern financial accounting is based on a double entry system. As the double entry bookkeeping solves the problem of managers like knowing whether they could trust their own books. However, to gain the trust, the independent public auditors have to verify the company’s financial information. This process of auditing is costly and it binds the company’s accountants for long time periods.
While using the blockchain technology, instead of keeping separate records based on transaction receipts, companies can write their transactions directly into a joint register. This can create an interlocking system of permanent accounting records. As all entries in the blockchain-based system are cryptographically sealed and distributed. Therefore, chances of manipulating or destroying them to conceal activity are practically impossible. This process is exactly similar to the transaction process that a notary verifies but in an electronic way. The blockchain will allow auditors to verify a large number of data in a short period of time. The use of blockchain technology can even considerably decline the cost and time that is necessary to conduct an audit.
Association Of The Blockchain Technology For Auditors
- The blockchain technology has applications in external audit.
- If all the transactions that underlie the company’s financial status are on the blockchain than performing confirmations for that status would be less necessary. This can change the way that audits work.
- The combination of the blockchain solution with appropriate data analytics can help the transactional level assertions and it also helps auditor to spent it's in a better way by considering higher-level questions.
- For instance, auditing is not just checking the transaction details and the monetary amount, but it also checks the mannerism of recording and classifying the transactions.
Advantages Of Blockchain Technology In Accounting Industry
- Increasing Efficiency: The blockchain is a powerful and fast database. By using blockchain, one can get data in and out of the system more efficiently than interacting with legacy accounting software app.
- Reducing Errors: One of the biggest advantages of blockchain technology in the accounting industry is its ability to make almost negligible errors. As after the data is in the chain, the smart contracts will make many accounting functions automatic.
- Reduces Fraud: The unchangeable nature of blockchain technology makes the accounting system extremely difficult to manipulate. If someone wants to modify a record, the same change has to be made on all copies of the distributed ledger at the same time, which is highly impossible.
- Reduces Cost: The use of blockchain will increase efficiency and reduces the errors which will eventually lead towards cost reduction.
- Reduces Time: Blockchain reduces the audit time. With the use of smart contracts, many auditing functions become automated which will reduce the time. The built-in tractability of blockchain technology makes auditing easy and fast. The blockchain developers are coming up with systems that can help accountants in auditing the transactions.
Future Of Accounting With The Help Of Blockchain
- Blockchain will be the major reason behind the reduction in the need for reconciliation and dispute management.
- The use of blockchain will optimize many current-day accounting department processes, will increase the efficiency and value of the accounting function.
- The scope of skills represented in accounting will change.
- It will eliminate some work such as provenance assurance and reconciliations, while other areas such as advisory, value-adding activities, and technology will expand.
- Blockchain-based transactions will shift the focus of the auditor for auditing a company.
- The accountants will not need to be engineers with detailed knowledge of how blockchain-based systems work. But they will have to give advice on blockchain adoption can impact the businesses and clients.
Conclusion
The blockchain is a new perimeter for the accounting. This technology is here and it is only going to get bigger day by day. The one who starts using this technology for their business early will always have the upper hand. The blockchain can revolutionize the core infrastructure systems of accounting industry around the globe by bringing in greater efficiency and transparency. There are many blockchain development companies like Openxcell, that is enhancing the use of this technology by developing blockchain-based apps for various industries.