Blockchain promises better, faster, cheaper data for accountants, auditors and their clients

Baozou Comment : Auditing is a trust-based service, and the privacy and rights of stakeholders and investors should be strictly protected. However, scandals continue to emerge, and there is human manipulation and bias in the service system, which has a great negative impact on the integrity of the audit process. Blockchain technology can provide real-time and permanent records, which will greatly improve the accuracy of financial transactions, reduce financial fraud, and improve data transparency. It will truly eliminate the significance and value of bookkeepers, auditors, and third-party groups in the financial field, thereby expanding the scale of the economy and improving business efficiency.

Translation: Flora

While blockchain technology is poised to disrupt most industries, it will also have a huge impact on careers that serve all industries.

The first to be affected is the accounting field. Blockchain technology can provide a real-time, permanent record of financial transactions, allowing accountants to perform real-time audits of bank capital and risk positions, avoiding time-consuming manual audit procedures.

The accounting system using blockchain technology has great advantages in improving financial accuracy, reducing financial fraud, and improving data transparency. In addition, the use of blockchain technology will truly eliminate the need for bookkeepers, auditors, and other third-party groups, thereby expanding the scale of the economy and improving efficiency in the commercial and financial fields.

These impacts are closely tied to the fine-grained discipline of auditing, a trust-based service that strictly protects the privacy of stakeholders and investors. However, as reported in some news scandals, human manipulation and bias can still infiltrate the service and negatively impact the integrity of the audit process.

Currently, private auditors involved in verifying the accuracy of financial statements may be involved in conflicts of interest because they charge clients for auditing. This behavior creates two problems. One is that these private auditors may retain big-money clients by revealing financial information to them; the other is that auditing requires checking large amounts of complex data from different sources, which is prone to errors.

Therefore, the value of blockchain technology is reflected. This technology can avoid those errors that humans cannot avoid and has extremely high trust and dependence. Blockchain technology provides automatic third-party confirmation through a distributed network, ensuring the accuracy, integrity and permanence of all transactions.

Global accounting firm Deloitte has announced that it will establish a pool of 50 Dublin-based blockchain developers over the next 12 to 18 months, marking a major step forward for the technology in the accounting and auditing sector. Inspired by Deloitte’s The Grid fintech initiative, the project, called the EMEA Financial Services Blockchain Lab, will allow the “Big Four” accounting firms to examine the impact of blockchain on the accounting world and its related fiduciary services.

Another company that has thrown its weight behind the intersection of blockchain technology and the accounting world is San Francisco-based Subledger, which offers businesses a scalable, blockchain-based, dual-entry accounting ledger solution that delivers real-time financial and performance data.

Tom Mornini

Tom Mornini, Founder and CEO, said:

“Until now, accountants have been involved in a large number of transactions, coordination and control activities, and both deliberate and unintentional errors have occurred. This situation will completely change once blockchain technology is widely used throughout the accounting field. The technology is undoubtedly a major game changer.”

Mornini said the most interesting work he has done so far has been developing a cryptographically verifiable transaction engine.

“Imagine a scenario where all of Nasdaq’s daily trades are put into blocks and published on encrypted chains, and the process, time and reason of these trades are clearly recorded. In addition, these data show extremely high transparency, and everyone can see the whole process of these trades in detail.”

“The problem with these trading engines is not only getting the right trades, but also being able to do the accounting perfectly, accurately, and efficiently. That’s going to be something we need to solve eventually.”

In addition to these fascinating statements, Mornii pointed out that the application of blockchain technology in the accounting field is still at the stage of supporting business processes and regulatory interfaces. "The Big Four accounting firms have made a lot of statements about blockchain technology, but they have not really put it into practice. The Big Four accounting firms are very clear that blockchain will change their future, but I think they are not very clear about how to use this technology."

Mornini expressed his views on blockchain:

“In short, I think Bitcoin will become a common ledger in the near future, where the internal ledgers of companies will be consistent with the records of banks. The Bitcoin blockchain will be a super simple way to establish an accounting system that automatically ensures the authenticity and accuracy of the data. The value of the blockchain lies in the fact that these records are not only extremely accurate and authentic, but also because they are updated every ten minutes, which ensures the synchronization of the facts.”

Mornini figuratively said that the stock market holds a game every four years, and everyone prepares popcorn and starts waiting for their earnings to see if their predictions about the future are correct. He said he was surprised to see so many people try to predict the future and think that no one else can do it.

“Isn’t a stock that gives you real-time results more valuable than a competitor that only gives you a glimpse into their business model every quarter? That to me is less risk. And less risk often means more price.”

Mornini concluded:

“Existing accounting mechanisms are not suited to today’s business volumes and ‘time-to-information’ needs. Worse, they are based on manually operated software. This is where blockchain and cryptocurrency trading tools have the opportunity to revolutionize the status quo.”