Block-chain Technology in Accounting - IT Write Up

This report analyses how block-chain technology has dominated the accounting sector while embracing chosen technology within a bid to democratize global markets. It also discusses the barriers, problems, and challenges raised due to this new technology.

Running Head: IT Write Up
0
IT Write Up
Block chain Technology
(Student Details: )
9/12/2019

IT Write Up
1
Contents
IT Write Up: Block-chain Technology in Accounting..............................................................2
Introduction................................................................................................................................2
Block-chain Technology............................................................................................................2
Block-chain Technology in Accounting....................................................................................3
Current State of Accounting...................................................................................................3
Blockchain Technology in accounting industry.....................................................................4
Analysis......................................................................................................................................4
How BT is helpful to Accounts..............................................................................................4
Examples of big accounting firms using BT..........................................................................5
Problems or Challenges of the new technology.....................................................................6
Conclusion..................................................................................................................................7
References..................................................................................................................................8

IT Write Up
2
IT Write Up: Block-chain Technology in Accounting
Introduction
This discussion is based on concrete research on novel technology i.e. block-chain
technology (BT). The research is going to study the concept of blockchain technology while
explaining it in detail. In this context, with the help of this report it will be explored how the
new advancement in technology be helpful to accounts. Apart from this, while discussing
positive points this report will also discuss the barriers, problems, and challenges raised due
to this new technology. In general, BT is having the potential to revolutionize the whole
accounts industry. Besides, BT has the capability to evolve every industry of the world. It is
worth knowing that BT has already ignited curiosity all across the global sectors and
industries as well, especially in accounting or finance sector. In today's era, the BT is being
called the future of financial services infrastructure. In this way, this paper is going to analyse
and conclude the question that how BT has dominated the accounting sector while embracing
chosen technology within a bid to democratize global markets.
Block-chain Technology
In the context of accounts, BT offers clarity over the ownership of assets as well as the
presence of responsibilities and thereby it could typically advance efficiency of the whole
sector. The blockchain technology was first introduced being the core technology with the
help of Bitcoin in 2008. In this way, the concept of blockchain technology can be explained
as its use of peer-to-peer network technology while combining with cryptography.
Subsequently, such combination allows different parties that do not know each other for
conducting transactions. The BT is important and trending because it does not require a
conventional trusted middle element like a bank or payment processing link. In this way, BT
is highly capable to provide novel opportunities for reducing transaction costs effectively
while also decreasing transaction settlement-time. This is because BT has eliminated the
intermediary which is the best way to harness the power of peer-to-peer networks in this
digital era. Thus, BT can transform or disrupt a multitude of industries, all along from
accounting services to the public sector. In the end, big number of venture capital firms, as

IT Write Up
3
well as great enterprises, is looking for investing in BT research and trials for re-imagining
conventional business models.
Block-chain Technology in Accounting
From the definition perspective, technically blockchain can be defined as a back-end database
which can be inspected freely. Apart from this, in the business context, block-chain can be
explained as an exchange network in order to move transactions, assets, value among peers in
the absence of intermediaries. In addition to that, from a legal perspective, BT validates
transactions while replacing trusted entities of the past. Now, this discussion is going to study
how BT is going to create a novel world for accounting industry.
Current State of Accounting
As we know that automation in business is essential as it unlocks countless opportunities. In
this context, when there is a task that is still being performed manually, then it will definitely
extend costing to companies’ time. Thus, for achieving their daily targets the modern
industries like accounting, relies on mutual checks, control-mechanisms, as well as
balances. It can be said that using automation affects everyday operations for today’s
accounting companies. In this way, current state of accounting firms is driven through
modern financial accounting which is typically based upon a double-entry system. Here,
double-entry system significantly solved the problem of modern managers. However, for
gaining the trust of outsiders, the public auditors need to verify every firm’s financial info
and data.

IT Write Up
4
Blockchain Technology in the accounting industry
Recent surveys and detailed research found that BT can greatly enhance the accounting
industry with the help of reducing the budgets for maintenance and reconciliation of ledgers
while providing absolute certainty over the history of assets of an organization. BT is helpful
in accounting industry because by using blockchain technology, contemporary organizations
can easily write their transactions straight into a joint register while also erecting an
interlocking system of stable accounting records rather than keeping discrete records on the
basis of transaction receipts. While using BT in accounts, all entries are distributed as well as
cryptographically sealed (Gatteschi et al., 2018). In this way, such practice reduces the
chances of manipulating or destroying financial entries and thereby any conceal activity is
practically impossible. In this way, BT protects the accounts and information resides in them
in an electronic way (Lindman et al., 2017). Therefore, BT will allow auditors to validate a
huge number of data within a less period of time which is making the whole accounting
industry efficient. In this way, the most important resources include cost and time, which are
necessary to conduct; a financial audit would decline considerably (Zheng et al., 2018).
Analysis
This section is dedicated to conduct, integrate and summarize the detailed analysis of how BT
is helpful to modern accounting industry in this digital era (Fanning & Centers, 2016). Apart

IT Write Up
5
from this, some contemporary challenges associated with this new technology will be
discussed here.
How BT is helpful to Accounts
It has been found that BT is promising many advantages for all accounting firms whether
they are small or big, the key ways in which BT is helpful to accounts, are as follows:
Increasing Efficiency
The recent data is suggesting that blockchain in BT is a powerful and fast database. Thus, by
using BT, data can be collected into as well as out of the system more efficiently as compared
to while integrating with legacy accounting software apps (Zheng et al., 2018).
Reducing error
The biggest benefit of the BT is that blockchain makes negligible errors in modern
accounting systems. Here, once the data is in the blockchain, smart contracts are going to
make several accounting functions automatic, which considerably reduces human errors
(Wang et al., 2017).
Reduces Cost
Such advantage of BT to accounts suggests that blockchain is not a threat but an opportunity
for the whole accounting industry. The different costs will be reduced and thereby accounting
firms may expect to see a quick cost-saving as compared to those of conventional accounting
systems (Kokina et al., 2017).
Reduces Fraud
It is evident that the immutable nature of BT makes it tough to manipulate and perpetrate
financial data and files; hence BT helps accounts to reduce fraud largely (Pay, 2018).
Reduces Time
In this context, it can be said that BT is very helpful for accounting systems as it saves time at
large extent. This key feature of blockchain which reduces audit time is highly helpful for the
modern accounting industry (Martin, 2018).

IT Write Up
6
Source: (Kokina et al., 2017)
Examples of big accounting firms using BT
1. KPMG has recently launched the ‘Digital Ledger Services’ program in the year 2016
for helping financial services firms investigating block-chain apps (Hamida et al.,
2017).
2. Besides, Ernst & Young was the first one to start accepting Bitcoin as the payment
method (Fanning & Centers, 2016).
3. Most importantly, Deloitte has been playing the block-chain game all the way back
from 2014 while launching Rubix, billed as a ‘one-stop block-chain software
platform.’
4. In addition, PwC also began accepting Bitcoin at their Hong Kong office in December
2017 (Tagbotor et al., 2015).
Problems or Challenges of the new technology
The problems and challenges associated with BT in general, are as follows:
 Complexity
 Politics

IT Write Up
7
 Network size (Bohme et al., 2015).
 Human error
 Transaction costs, network speed
 Unavoidable security flaw (Lindman et al., 2017).
In the context of problems of this new technology, majorly two key Factors are stopping the
mass adoption of BT in Accounting, which is as follows:
 The block-chain technology is still far from the global accounting industry because
this industry is the lazy in nature which will make it wait for too long while
embracing BT technology (Maltseva, 2018). However, the accounting industry cannot
be wholly blamed for this problem as enterprise-ready block-chain solutions for the
accounting industry are not yet readily prepared efficiently (Gatteschi et al., 2018).
 In addition to that, accounting, tax as well as audit cloud software providers will
definitely need to adjust to the enormous shift caused by BT. It has been observed that
it has taken some decades for current accounting software programmers to form the
knowledge base of accounting rules and procedures within the software code (Bohme
et al., 2015).
 Another problem is that it is not so easy for Block-chain-based accounting systems to
replicate exact deep knowledge promptly (Advids, 2018).
 While talking about the technical side, many of the accounting software is not
compatible with BT which makes it difficult to adapt BT effectively and quickly as
well (Lindman et al., 2017). Even when an accounting firm implements block-chain
technology onto its existing software, it may not be responsive. In this way, adoption
will need purchase of cloud-based accounting services as they become available, and
possibly hiring a block-chain developer for creating custom user interfaces
(Zimmerman & Yahya-Zadeh, 2011).
Conclusion
In whole, this report has successfully studied and analysed all possible aspects of block-chain
technology for accounting firms and thereby the whole accounting industry all over the

IT Write Up
8
world. It has been found that BT being a novel boundary for accounting and there is still a lot
which requires to be sorted out which still demands to be developed more. In addition to that,
there is number of reasons which have been described in this analysis for which accounting
firms should use block-chain technology for making their financial audits as well as
operations easier and efficient. The block-chain technology has the potential to shape shift the
nature of today’s accounting. It may constitute a way to vastly automate accounting processes
in compliance with the regulatory requirements. As described above, there are numerous
starting points to leverage block-chain technology. In spite of the hurdles which are on the
way ahead, it is believed that BT could revolutionize the core infrastructure systems of
accounting industry around the globe, thereby bringing in greater transparency and
efficiency. In addition to that, it will be exciting to see how the industry develops itself near
future. In a nutshell, a force of novel apps will most probably follow which are built on top of
each other, leading way for new, unparalleled services.

IT Write Up
9
References
Advids, 2018. 20 BLOCKCHAIN BUSINESS OPPORTUNITIES EXPLAINED IN VARIOUS
SECTORS. [Online] Available at: https://blog.advids.co/20-blockchain-business-
opportunities-explained-in-various-sectors/.
Bohme, R., Christin, N., Edelman, B. & Moore, T., 2015. Bitcoin: Economics, technology,
and governance. Journal of Economic Perspectives, 29(2), pp.213-38.
Fanning, K. & Centers, D., 2016. Blockchain and its coming impact on financial services.
Journal of Corporate Accounting and Finance, 27(5), pp.53-57.
Gatteschi, V. et al., 2018. To blockchain or not to blockchain: That is the question. IT
Professional, 20(2), pp.62-74.
Hamida, E., Brousmiche, K.L., Levard, H. & Thea, E., 2017. Blockchain for enterprise:
overview, opportunities and challenges. The Thirteenth International Conference on Wireless
and Mobile Communications.
Kokina, J., Mancha, R. & Pachamanova, D., 2017. Blockchain: Emergent industry adoption
and implications for accounting. Journal of Emerging Technologies in Accounting, 14(2),
pp.91-100.
Lindman, J., Tuunainen, V.K. & Rossi, M., 2017. Opportunities and risks of Blockchain
Technologies–a research agenda. 50th Hawaii International Conference on System Sciences .
Maltseva, D., 2018. How will Blockchain create wild new opportunities in the business
world. [Online] Available at: https://medium.com/coinmonks/https-medium-com-dana-m-
how-does-blockchain-create-wild-new-opportunities-in-the-business-world-d6da6e2311f3.
Martin, R., 2018. Five Business Opportunities for Blockchain for 2018. [Online] Available at:
https://igniteoutsourcing.com/blockchain/blockchain-business-applications/.
Pay, O., 2018. 5 Cryptocurrency and Blockchain Related Business Ideas 2018. [Online]
Available at: https://blog.goodaudience.com/5-cryptocurrency-and-blockchain-related-
business-ideas-2018-ccaf801e98c.

IT Write Up
10
Tagbotor, D., Adzido, R. & Agbanu, P., 2015. Analysis of Records Management and
Organizational Performance. International Journal of Academic Research in Accounting,
finance and management sciences, 5(2), pp.1-16.
Wang, X. et al., 2017. Human resource information management model based on blockchain
technology. In 2017 IEEE Symposium on Service-Oriented system engineering., 2017. IEEE.
Zheng, Z., Xie, S., Dai, H.N. & Wang, H., 2018. Blockchain challenges and opportunities: A
survey. Int. J. Web and Grid Services, 14(4), pp.353-75.
Zimmerman, J.L. & Yahya-Zadeh, M., 2011. Accounting for decision making and control.
Issues in Accounting Education, 26(1), pp.258-59.