Blockchain and accounting, a match made in heaven. Blockchain offers a new, reliable way to store, share, and record all sorts of data. It is penetrating in every industry. May that be tourism, life cover, academic, financial investing, real estate or any others, companies all over have started incorporating blockchain into their financial working processes.
The points of incorporating blockchain with accounting that will be discussed are:
- Blockchain-Accounting Potential
- Fraud reduction
- Ease in Auditing
- Better Regulatory Compliance
- Reconciliation Benefits
- Error Evasion
- Better Efficiency
- Effect of Accountancy Jobs
Blockchain embedding with accounting has been a jaw-dropper. It not only helped in the reconciliation of accounts and recording cash transactions but it also provided support in the storage of virtual assets.
Accounting filing needs that required paperwork has also started to involve cloud-based accounting methods along with it. The need for paperwork involvement in accounting still remains persistent and has not been completely evicted.
While reviewing books the accountants had to look at the paperwork. This may be time to adopt some new changes. It provides the CPA agencies a chance to organize the audit process to provide transparent and permanent recording of all the data and ensure accuracy and authenticity.
Being a support to improve accountancy, Blockchain also focuses on providing a fraud-free transactional movement because of its stable nature.
Making changes in a record on the blockchain is very difficult because the modifier would have to simultaneously make changes in all those areas from where the ledger transaction has originated.
Ease in Auditing
Blockchain’s nature of traceability facilitates fast and easy data recording. This may lead to much lesser audits in the future.
Auditors can automate their auditing functions with smart contracts and blockchain would reduce the need for the time involved for checking accounting books.
Better Regulatory Compliance
The regulatory needs will not only be fulfilled in accounting agencies but security will also be enhanced and improved. Blockchain may become mandatory as regulatory authorities are welcoming this new tech involvement in their process work.
With Smart Contract, the month-end accounting pressure would relatively be reduced. If Blockchain automated reconciliation is initiated, it would be a help in the tasks that are performed by accountants.
Data entry would be the area where blockchain would be helping as human errors are reported to be the most. Blockchain helps in significantly reducing human effort and errors because the process of recording entries would be automated.
Its design is much more efficient than the prehistoric method of accounting. Blockchain’s performance is swift and sound. It reduces tedious efforts that are involved in recording and authenticating data compared to common accounting software.
Along with the reduction of errors and an increase in efficiency, Blockchain helps in reducing the cost of performing the same. While switching from the authentic method to blockchain accounting may involve some cost but it will be gradually recovered and cost-saving will also be observed later.
Effect of Accountancy Jobs
Accountants may get concerned when they hear news about blockchain enactment. It is a big move in the tech and accounting industry together.
Though the involvement of blockchain in some of the sectors has been a concern, the accounting industry will face only some effects and not completely change. Firms and accountants will now be able to provide their clients with the safety and security of their transactional records. Auditors and regulatory bodies will have ease of access to these records.
The need for accountants will not be affected but the duties will definitely change. They will now be performing the task of bringing the blockchain process together with the accounting. Accountants won’t lose their jobs nor other employees in the industry. The requirement for overseeing accounts receivable, contracts for payments, income and outflow monitoring, and prepare invoices will still require human effort.
The bottom line would be that Blockchain is not going to disappear any time soon. It is going to change the accountant’s operating systems by making:
- Relevancy in accounting.
- Efficient operations.
- Re-evaluating business models and assessing the need and benefits of implementing the blockchain solution.