Effect of Blockchain on Accounting Profession

Effects of Emerging Technologies on the Accounting Profession
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Effect of Blockchain on Accounting Profession
Blockchain refers to a modern system that records asset transactions and their details in several locations concurrently. Blockchains create interaction and transfer blocks. The blocks are usually assets of the contemporary kind, such as money, land title, identification details, and securities, to mention a few. The traditional accounting system maintains data in a centralized location, particularly accounting software application databases. The model abides by the double-entry accounting system that has been available for centuries. Accountants enter multiple transactions in the design and make any necessary adjustments. The model only allows accountants and auditors to retrieve information when needed.[ACCA, “Blockchain: Is It Still the Great Accountancy Disruptor? | ACCA Global,” , 2021.]
In contrast, all relevant stakeholders can access the blockchain by applying a triple-entry bookkeeping technique. Every stakeholder, including accountants, clients, auditors, and regulators, has an identical copy of ledgers at all times. The ledgers are distributed across a peer-to-peer system spread across various sites. Altering information present in the blockchain requires authorization from all involved parties hence increasing the reliability of the information. The primary focus of the accounting profession is measuring and communicating financial information and the information for a better understanding. The main concern is ascertaining rights and obligations over resources or planning how to distribute economic resources properly. The application of blockchains will improve efficiency by providing clarity on assets ownership and duties. Blockchain can enhance the accounting profession by reducing maintenance and reconciliation costs. It could help accountants get a clear understanding of available resources and their organizational duties. Also, it could free up resources and allow accountants to focus on planning and valuation instead of recordkeeping.[ACCA, “Blockchain: Is It Still the Great Accountancy Disruptor? | ACCA Global,” , 2021.]
Additionally, blockchain will result in additional transactional-level accounting. However, transactional-level accounting will not involve accountants. Successful accountants will assess the actual economic situation of the blockchain record, integrating the record to economic trends and valuation. For instance, the existence of a debtor might be made specific in blockchain but still hold debatable aspects on its recoverable and economic value. Also, blockchain might verify the ownership of an asset, but the actual condition, location, and exact value will require assurance. Blockchain will also improve accounting scope by eradicating reconciliations and offering certainty on transaction history. The procedure will amalgamate multiple areas presently viewed as complex such as the data value for certain companies. As expressed, blockchain replaces bookkeeping and reconciliation activities. The system threatens the duties of accountants in those sectors and adds strengths to value addition in other sectors.[ICAEW, “Blockchain and the Future of Accountancy,” , 2021.]
Further, blockchain will change the scope of accounting skills. Some accounting roles such as reconciliation and provenance assurance will decline or be eradicated, while other sectors like technologies and value-adding operations will expand. Also, the auditors’ focus will shift to facilitate an audit of companies with proper blockchain-based transactions. The need to confirm the existence and accuracy of blockchain-based transactions with external sources is low. However, it is relevant to evaluate the recording and recognition process for the transactions and criteria followed on deciding critical elements like valuations. In the long run, accountants will not require complete knowledge of blockchain operations. Instead, they will need knowledge on how to counsel on blockchain endorsement and consider the effects of blockchain on their companies and clients.[ICAEW, “Blockchain and the Future of Accountancy,” , 2021.]
Effects of Artificial Intelligence on the Accounting Profession
Artificial intelligence has penetrated the accounting sector playing a crucial role in increasing business efficiency, preventing and controlling business risks. It also improves business effectiveness and eliminates errors in businesses. Artificial intelligence is capable of handling multiple accounting transactions faster and effectively. Companies still need accountants to analyze and interpret data and offer consultation services. It has provided transformation and assistance to accounting operations, increasing the quality and efficiency of accounting. Artificial intelligence has enabled accountants to apply automated results in making a decision. Automation has facilitated effective data extraction an...