ACCT6007 Financial Accounting: AI and Blockchain in Accounting

This essay critically analyzes the impact of technological changes, specifically Artificial Intelligence (AI) and blockchain, on the accounting profession. It discusses how AI and blockchain are currently used in accounting practices, supported by case studies of Ernst & Young (EY)'s adoption of these technologies. The essay explores the potential future applications of AI and blockchain in accounting, including AI's role in assisting accountants with complex tasks and blockchain's impact on cloud computing and financial monitoring. It also addresses potential changes in financial reporting regulations due to these technological advancements, highlighting the importance of accountants adapting to these changes to maintain relevance and provide value in the evolving accounting landscape. The analysis concludes that while technology presents both threats and opportunities, embracing AI and blockchain can enhance efficiency and accuracy in accounting practices.

Financial Accounting Theory and Practice

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Contents
Introduction......................................................................................................................................2
Artificial intelligence and Blockchain.............................................................................................3
Artificial intelligence and Blockchain used in accounting..........................................................3
Artificial intelligence and Blockchain in accounting in the future..............................................4
Case: Artificial intelligence is being used in accounting.................................................................4
Case: Blockchain technology is being used in accounting..............................................................5
Agree with argument.......................................................................................................................6
Financial reporting regulation change in the future.........................................................................6
Conclusion.......................................................................................................................................8
References........................................................................................................................................9

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Introduction
In the current era, the technology advancement is increasing due to which the many industries
and professionals are affected. The major changes in technology are creating an impact on
accounting and the ways the accountant performs their jobs. The aim of the paper is to critically
analyse the threat or an opportunity for the accounting profession due to the change in
technology. The major technologies that are discussed in the paper include Artificial intelligence
and blockchain technology and their likely uses in accounting. In addition, there is decision-
related to the use of these technologies in accounting in the near future. The details are explained
with the help of the one case of each for the use of AI and Blockchain in accounting.

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Artificial intelligence and Blockchain
Artificial intelligence is a range of computer science which mainly focuses on the formation of
the intelligent equipment that performs the effort and act in response like human being. On other
hand, the blockchain technology is an undeniable ingenious development. This technology
formed the backbone of an innovative kind of internet by permitting the digital facts to be
dispersed but not to be copied. In other words, blockchain technology is an incorruptible digital
book of the economic connections that can be programmed to best ever not only the transaction
related to finance but also the virtually everything that has value (Nofer, Gomber, Hinz &
Schiereck, 2017). AI and blockchain technology is widely used in accounting.
Artificial intelligence and Blockchain used in accounting
The effective use of the computer technology in the process of accounting is not new but AI
technology implementation makes the accounting process much powerful and improvements in
the system are visible. AI allows the professional to get the extremely accurate outcomes which
are not possible with the help of humans (Omoteso, 2012). AI technology is widespread due to
which its adoption in business and accounting is growing. This technology allows the accountant
to better prediction and effective intelligent automation which is essential to deliver more value,
focus on forward-looking analysis and offer the great leadership to businesses (Kokina &
Davenport, 2017). Though, the implementation of the Artificial intelligence is difficult for the
professional of the accountant as they have to become handy with the use of AI.
On the other hand, Blockchain technology is a book-keeping technology. This technology is
disturbed with the transfer of ownership of assets and also contribute in maintain a ledger of
financial information accurately. This technology contributes in enhancing the book-keeping

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professions by decreasing the cost of continuing ledgers (Tapscott & Tapscott, 2017). This
technology is known as the replacement for reconciliation and bookkeeping work. Blockchain
technology could threaten the work done by the accountants by adding the strength to the
focused on providing value elsewhere (Li, 2016). Though on the other hand, the accountants get
many opportunities as an expert can keep the records, application of complex rules with the
business logic and setting the standards. The accountants face some of the issues at the time of
implementing the blockchain technology in the accounting system.
Artificial intelligence and Blockchain in accounting in the future
In the near future, it is expected that the Artificial intelligence system will provide the assistance
and help to accountants so that they can provide more insight and further up the value chain. This
technology will allow the accountants to take the decision for the complex task. Institute of
Chartered Accountants in England and Wales build a positive vision for the future in which they
progress a deep understanding for how AI can resolve the problems related to accounting and
business (Bolinger, 2017). Blockchain in the near future will increase the use of cloud computing
technology by clients or the accounting organisations. In the near future, the accountant will get
the detailed knowledge of concept how the blockchain perform the working (Alarcon & Ng,
2018). This system will be used by almost every accountant in the near future for monitoring the
financial performance.
Case: Artificial intelligence is being used in accounting
One of the big four tax and accounting company, Ernst & Young (EV) makes use of AI for their
processes. The company make use of this technology to review the lease accounting standard
when the International Financial Reporting Standards (IRS) issues a new lease regulation.

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Generally, this has been found that large organisations have to manually re-examine tens of
thousands of leases to obey with the new law. Along with this, the global clients of the company
processes millions of invoices on yearly basis and for this, they make use of this technology so
that they can identify the faults. This is found that the fraud detection system is 97% accurate
than the other companies (Zhou, 2017). This shows that the ways through which the company
make use of AI in accounting.
Case: Blockchain technology is being used in accounting
Blockchain technology is used by big four for their accounting practices. This technology was
initially accepted by EY Company for their accounting practice. The adaptation of this
technology helps EY for performing the audit for the companies who are making use of
cryptocurrencies. In this kind of audits, the company have to make use of the basis of testing of
Blockchain assets, liabilities, equity and smart contacts. In addition, the EY Blockchain
Analyzer is designed to facilitate EY audit teams while meeting an company’s entire transactions
facts from different numerous blockchain ledgers (EY, 2018). The auditors can question the data
and this technology allows them to perform the examination of transactions, reconciling and
recognizing the transaction outliers. This technology is formed with the motive to assist the
multiple cryptocurrencies which include Bitcoin, Ether, Litecoin and Bitcoin Cash (Accounting
for cryptocurrency, 2018).
This reflects that the company believes in making use of the advanced technology. This is the
reason company EY makes use of Artificial intelligence and Blockchain technology in their
accounting practices. Though, the company educated the employees on the use of this
technology in their accounting practice.

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Agree with argument
Considering the real case, I believe that the argument made by the author is fact. According to
my point of view, these technologies help the accounting company to meet the standards
introduced by the International Financial Reporting Standards (IFRSs) and Australian
Accounting Standards (AASs). The accounting standards are fulfilled by the company with the
help of this technology. This is clear because the companies are adopting these technologies
because they are willing to fulfil the standards. The company who are following the same include
KPMG, EY and many others.
Financial reporting regulation change in the future
It is expected that in the near future there will be major changes in the regulations of financial
reporting considering the advancement in the accounting. The accounting standards will include
the use of the technology for conducting the practice of accounting. Australian Accounting
Standards can upgrade the style of presenting the accounting data which is possible with the use
of technology. In addition, there might be the inclusion of some modified accounting treatments
which is essential to conduct by companies (Bizarro & Dorian, 2017). The companies who
perform the accounting practice will surely make use of technology for implementing the
modified accounting treatments. Considering the viewpoint of Erik Asgeirsson, president and
CEO of CPA.com believes that Blockchain is considered as just the next in the long line of
transformation within the world of accounting.
In addition, The International Financial Reporting Standards (IFRSs) and Australian Accounting
Standards (AASs) can bring the regulation in which it will be mandatory for the companies to
adopt a particular software and technology for making the treatment of tax and other

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transactions. Moreover, this is expected in the near future that there will be the scope of the
appropriate use of AI and Blockchain technology in accounting practices. Though, these
technologies are used by big four accounting but with the time the other small companies will
also make use of these technologies.

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Conclusion
The analysis reflects that this is the fact that the technology changes are bringing the changes in
the accounting practices that are conducted by the company. AI and blockchain technology is
used by the companies for their accounting practices. The companies who mainly use this
technology include the big four companies. Along with this, this has been found that technology
supports the companies by providing them with numerous benefits which help them in
performing their business practices effectively. This is the major reason that these technologies
are adopted by the well-known accounting companies. The use of accounting practices is
explained with the help of taking one case for the AI and blockchain uses. In the end, there is
discussion related to the future changes in the accounting considering the use of technology in
accounting practice.

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References
Accounting for cryptocurrency. (2018). Professional Accountant, 2018(32), 10-12.
Alarcon, J., & Ng, C. (2018). Blockchain and the future of accounting. Pennsylvania Cpa
Journal, 88(4), 26-29.
Bizarro, P., & Dorian, M. (2017). Artificial Intelligence: The Future Of Auditing. Internal
Auditing, 32(5), 21-26.
Bolinger, G. (2017). Artificial intelligence and the future of the accounting profession. Cpa
Practice Advisor, 27(8), 17-17.
EY. (2018). EY announces blockchain audit technology. Retrieved from:
https://www.ey.com/gl/en/newsroom/news-releases/news-ey-announces-blockchain-
audit-technology
Kokina, J., & Davenport, T. (2017). The emergence of artificial intelligence: How automation is
changing auditing. Journal of Emerging Technologies in Accounting, 14(1), 115-115.
Li, V. (2016). Bitcoin's useful backbone: Blockchain technology gains use in business, finance
and contracts. Aba Journal, 102(3), 31.
Nofer, M., Gomber, P., Hinz, O., & Schiereck, D. (2017). Blockchain. Business & Information
Systems Engineering: The International Journal of Wirtschaftsinformatik,59(3), 183-187.
doi:10.1007/s12599-017-0467-3

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Omoteso, K. (2012). The application of artificial intelligence in auditing: Looking back to the
future. Expert Systems with Applications, 39(9), 8490-8495.
doi:10.1016/j.eswa.2012.01.098
Tapscott, D., & Tapscott, A. (2017). How blockchain will change organizations. Mit Sloan
Management Review, 58(2), 10-13.
Zhou, A. (2017). EY, Deloitte And PwC Embrace Artificial Intelligence For Tax And
Accounting. Retrieved from: https://www.forbes.com/sites/adelynzhou/2017/11/14/ey-
deloitte-and-pwc-embrace-artificial-intelligence-for-tax-and-accounting/#1119e5143498