Academy of Accounting and Financial Studies Journal (Print ISSN: 1096-3685; Online ISSN: 1528-2635)

Abstract

Blockchain Technology and Implications for Accounting Practice

Author(s): Michael Adelowotan, Daniel Coetsee

Purpose - The article discusses the possible implications of blockchain for accounting practice and what further developments are needed to create an integrated accounting system on blockchain technology. The focus is on both accounting and auditing. Approach – The article follows a structure approach by identifying characteristics of blockchain technology to discuss the implications for accounting practice. Findings - The instant verification and immutability features of blockchain systems provide for the integrity of data for both accounting and auditing purposes. However, the intensive use of blockchain for accounting information purposes depends on different and cheaper validation processes. The complexity of different accounting transactions with related estimates and uncertainty needs to be captured correctly on blockchain through use of interventions such as smart contracts without limited human invention to be successful. The so-called triple-entry accounting provides for the secure capturing of accounting information for use by different stakeholders, but currently does not change the double-entry accounting system to prepare financial statements. Confidentiality might become an issue with the real-time distribution of information among different stakeholders. Therefore, entities might opt for the use of private or consortium blockchain systems. Blockchain creates an avenue for continuous audit, but the independence of the auditor might be compromised. Value – The article identifies the possible effect of blockchain on accounting practice and what further developments are still needed to create an integrated accounting system on blockchain technology.

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