by Eloisa Marchesoni
Although the blockchain is closely associated with the cryptocurrency, Bitcoin, it is always good to keep in mind that the technology has the potential to be applied to a broad spectrum of industrial sectors.
One of these is accounting. The reason why today's accountants should be concerned with extending their knowledge about the blockchain is that it has two characteristics, which are crucial to their profession: transparency and immutability. It could be of enormous benefit to the integrity of an accounting company that their records are easily accessible only to authorized persons. Of course, there must be rules that also regulate the way authorized entities can access financial records, and blockchain technology uses 'smart contracts'. to comply with these rules.
Experts suggest that blockchain technology is the next step for the accounting and control industry, and this for a good reason, which certainly does not escape the watchful eyes of the "Big Four", the four largest professional service networks in the world. They are already making an effort to implement blockchain in some of the services they offer to their customers. Here is a brief review of how each of them has decided to look to the future of auditing through this technology.
In an attempt to guide the development of blockchain in auditing, Deloitte created The Blockchain Center of Expertise and The Blockchain Lab. As a result, there is a chain developed specifically by Deloitte and a number of other applications based on it, suitable for tackle most of the challenges associated with supply chain and auditing services. In addition, Deloitte has developed the Minimum Vital Ecosystem, which allows key ecosystem actors to interact and exchange important information: it is a source of information from which accountants can retrieve data for the evaluation of the companies they serve.
EY is another large professional service company that wants to use Blockchain technology to transform the way the company approaches the accounting system. For starters, EY has started accepting Bitcoin (BTC) as a means of payment in its office in Switzerland, but this could only be the natural consequence of the fact that it has developed a solution to solve transactional conflicts, which is based on blockchain smart contracts . In practice, practically speaking of its direct application to the world of online advertising, this solution consists in the live recording of online sales transactions between creators of multimedia content and advertisers, thus allowing also to easily go to the controversies on the author's rights. without the interference of intermediaries. EY even invented the EY Blockchain Analyzer, which is able to collect and organize encrypted transactions of any organization, making it possible to perform simple external control checks on the organization.
KPMG has focused its efforts with blockchain looking for ways to increase service efficiency, reduce fraud and improve customer experience. In addition, the audit giant is currently experimenting with blockchain-based services, developing a real suite of services, called Digital Ledger Services, of which the largest users will be banks and financial institutions.
Last but not least, is the blockchain experience of PricewaterhouseCooper, (PwC), which, among the services offered to companies, is trying to guarantee its customers the reporting of risks, the continuous monitoring of transactions and all sorts. other guarantees through the powerful help of Blockchain technology. PwC recently announced its intention to offer Blockchain-based auditing services, focusing on the implementation of ground-up and third-party solutions.
You should now ask yourself exactly what benefits Blockchain offers to professional service companies, and not just those that fall into the "Big Four" category. These potential advantages are numerous:
Increase of efficiency
Well designed chains make up fast and powerful databases. Getting data in and out of the system can be done more efficiently than if the process was performed through interaction with legacy accounting software applications.
The reduced probability of error in the use of blockchain is allowed by its innovative data entry system. In fact, once data has been recorded in the chain, smart contracts could automatically perform many accounting functions, reducing human error.
Easier resolution of disputes
Using smart contracts, accountants can automate many of the tasks associated with reconciliation, making it less expensive at the end of the month, quarter, year, etc.
An increase in efficiency and a reduction in errors translate into reduced costs. As a result of initial upfront costs, audit firms can expect to achieve quick savings compared to any conventional accounting system.
The immutability of these chains makes it extremely difficult to perpetrate fraud using the blockchain platform. To change a record, the same change should be done simultaneously on all copies of the ledger, which is practically unrealizable from a theoretical point of view.
Better compliance with regulations
The increased security offered by DLT can greatly simplify the burden of any company trying to meet regulatory requirements. As more and more regulatory authorities are opting for the adoption of blockchain technology, the use of DLT could even become mandatory in some crucial financial sectors.
Reduction of complexity and frequency of control.
One aspect of DLT on which accountants should be enthusiastic is its ability to reduce the frequency of human auditing. Thanks to the power of intelligent contracts, many control functions can in fact be automated, reducing the time that an auditor must devote to examining records.
The "Big Four" have proved to be committed, now more than ever, to explore how the auditing industry can benefit from the cutting edge blockchain. Many fans of this technology and cryptocurrencies claim that blockchain may represent the new frontier for all those companies that need to eliminate operational bottlenecks, including the delayed action of intermediaries. It could become crucial that even the follower companies consider the possibility of adopting blockchain in their activities, since planning to take a position in the crypto-space should not be considered only as an interest of the bigger players, but rather as a real need for every market player who does not want to be excluded from the long-term economy.