How will blockchain impact accounting?
Take a deep breath. If you are reading this, then you’ll be more knowledgeable than a majority of accounting professionals. As an accounting professional, you should welcome blockchain with open arms as it has the potential to revolutionize the accounting and finance industry.
Why is blockchain so revolutionary?
Right now, accounting records are stored in a centralized location in a database like QuickBooks, SAP, or Sage, but they could also be stored in Excel. Under blockchain, which uses distributed ledger technology (DLT), records would be stored in a shared ledger than can be distributed to all involved parties (accountants, auditors, or regulators).
So how can accounting benefit from blockchain?
Even though blockchain is still in its infancy, there is a consensus that blockchain will have a number of benefits for accountants and the accounting industry as a whole. Whether your firm is small or big, here are a few ways your firm can expect to benefit:
1) Reduced cost: Blockchain is expected to improve efficiency, and whenever efficiency improves, cost should go down!
2) Reduction in fraud or error: Fraud and errors will be reduced because many accounting functions will be automated. Right now, fraud and error in centralized accounting records occur because there are manual tasks that humans perform. As we all know, any process with humans involved is subject to some level of fraud or error!
3) Improved efficiency: If blockchain is appropriately implemented, then a company will be more efficient with any accounting task they are performing. It can be easier to reconcile information and it can be easier to pull data out of a system for analysis.
4) Audit efficiency: Due to the inherent design and structure of DLT, auditing procedures should be easier because an auditor will be able to apply more comprehensive audit procedures in an automated manner. Additionally, since the audit trail is easier to follow (due to how blockchain works), auditors will be able to do their job more efficiently.
5) Regulatory compliance: With DLT, it will be easier for regulators to monitor and assess the financial records of the company. Regulators can easily peer in and do what they need to do without a lot of manual action by the company.
Will blockchain be tested on the CPA exam?
Come on, I just explained how beneficial blockchain can be to the accounting industry. Accounting firms have already spent years understanding blockchain and creating blockchain products for their clients. While blockchain isn’t currently tested on the CPA exam, there is a good chance that blockchain will be tested on the CPA exam in the near future. My guess is that it will be added to the exam as part of the CPA Exam Evolution, which is expected to roll out in January 2024.
So what should I do to be ready for blockchain?
Even though blockchain has not officially arrived to the party, its arrival is not far off. You can get an edge by understanding what blockchain is and how it may impact your future career path! There are a number of other use cases for blockchain that could also impact your personal life and and day to day!
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