Blockchain and Accountancy
Unless you have been living under a rock, you have probably heard of the term “blockchain” being used in facebook posts, news articles, and your daily conversations. But what is blockchain used for? The simplest answer to that question is… EVERYTHING!
Specifically, in the accounting and bookkeeping field, blockchain is used in a number of ways. From paying vendors and employees, to reporting taxes and maintaining data integrity, to simply running a small business, blockchain is making the accounting world go round!
In this blog, we will discuss 5 different ways how blockchain is being incorporated into accounting.
The need for blockchain in accounting and bookkeeping, and how current systems are inadequate
The world of accounting and bookkeeping is due for a major change. For too long, businesses have been relying on outdated systems that are no longer able to handle the complexities of the modern world. Fortunately, there is a new solution that is quickly gaining traction: blockchain.
Blockchain is a distributed database that allows for secure, transparent, and tamper-proof transactions. This makes it the perfect solution for accounting and bookkeeping, where accuracy and security are of the utmost importance.
Currently, businesses rely on cumbersome and inefficient systems like double-entry bookkeeping. This involves recording every transaction twice, in order to ensure accuracy. However, this system is no longer viable in the digital age.
With blockchain, businesses can streamline their accounting and bookkeeping processes, while still maintaining accuracy and security.
Plus, blockchain offers other benefits that are essential for businesses, such as:
-Reduced transaction costs
-Faster settlement times
-Increased transparency and accountability
-Reduced fraud and error rates
Implications of blockchain for auditors
The blockchain is a new technology that allows for transactions and data storage to be decentralized and verified by a network of computers. This eliminates the need for a third party to mediate transactions and maintain records. The implications of this technology for auditors are significant.
Auditors are often responsible for verifying the accuracy of financial records. With the blockchain, this can be done automatically by the network of computers that verifies the blockchain. This reduces the need for auditors to manually check financial records, saving time and money.
The blockchain can also be used to verify the authenticity of objects. For example, a diamond could be verified as authentic by being inscribed on the blockchain with its unique characteristics. This would reduce the need for jewelers to provide certificates of authenticity, which can often be fraudulent.
The blockchain can also be used to verify the identity of individuals. For example, a person’s identity could be verified by their fingerprints, which would be stored on the blockchain. This would eliminate the need for identification cards, which can often be lost or stolen.
The blockchain is a revolutionary new technology that has the potential to change many aspects of our lives. For auditors, the blockchain represents a new way to verify financial records and authenticity of objects.
How the accounting profession can lead with blockchain technology
The accounting profession is in a unique position to lead with blockchain technology. Blockchain is a distributed database that allows for secure, transparent and tamper-proof transactions. The accounting profession has long been relied upon for its trustworthiness and transparency. Blockchain has the potential to revolutionize the accounting profession by making transactions more efficient, transparent and secure.
It can lead with blockchain technology by developing standards and protocols for the use of blockchain technology in accounting. Blockchain can be used to streamline the process of recording and verifying transactions.
Transactions would be recorded on a public blockchain and would be accessible to anyone with an internet connection. This would make it easier to verify the accuracy of financial statements and to detect fraud.