Blockchain technology and the future of audit

Explore how emerging technologies are continually evolving the audit. Emerging technologies such as blockchain, cloud, and machine learning have the potential to transform the way an audit is conducted while enhancing audit quality. Technology will help drive an increasingly interconnected financial ecosystem where data is available ever faster and updates become more real time. Blockchain has significant potential to boost the confidence and trust that a user has in data. The cloud could make auditing more centralised, whist quantum computing could one day be applied to auditing vast datasets.

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Blockchain technology and the future of audit

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Content:

• 22. How to Use Blockchain Effectively in Auditing and Assurance Services
• Survey on Blockchain Based Accounting and Finance Algorithms Using Bibliometric Approach
• How blockchain technology will affect the audit
• Will Blockchain Technology Disrupt Audit and Assurance Services?
• The Future Of Blockchain In Accountancy
• Blockchain and the future of accountancy
• The challenges of auditing blockchain
• Blockchain – the Future of Accounting

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22. How to Use Blockchain Effectively in Auditing and Assurance Services

Among the many disruptive technology trends impacting the way we do business, blockchain is one that is less well known within the accounting community. However, given its potential impact, blockchain is certainly not a trend that accountants can afford to overlook any longer.

Defined as an open, distributed ledger, blockchain technology records and verifies transactions without any trusted central authority. The technology itself exists as a file that maintains a continuously growing list of ordered records called blocks. Each block contains a timestamp and a link to a previous block using a "fingerprint.

While many of us associate blockchain with digital currency, like Bitcoin, its potential impact is much wider. From medical records to identity management to land rights and global trade, blockchain acts as an indispensable ledger — a central point of truth. Instead of companies keeping and reconciling records of the same transaction in their separate, privately managed databases, or ledgers, both sides of the transaction are recorded simultaneously in a shared ledger.

Because of this capability, as well as its ability to record transactions in real-time, blockchain is poised to up-end traditional methods of invoicing, documentation, contracts, and payment processing for businesses and industries both large and small. Blockchain now gives us a powerful way to share and access value. Impact on audit practices Like most forms of technology, blockchain in accounting and audit greatly reduces the potential for errors when reconciling complex and disparate information from multiple sources.

Further, accounting records are not alterable once committed under blockchain, even by the owners of the accounting system. Because every transaction is recorded and verified, the integrity of financial records is guaranteed. While impressive, this technology has the potential to greatly reduce or even eliminate the need for auditing resources — potentially disrupting the accounting profession as a whole.

With such upheaval on the horizon, you'd think accountants would take note. However, in a recent survey conducted jointly by Thomson Reuters and the Chartered Institute of Management Accountants, only 4 percent of respondents selected blockchain as the disruptor that will have a great impact on their business 25 years from now.

We believe it may be even more disruptive to the profession than machine learning, which will have a substantial impact on the profession, and we also believe the impact will start to be felt within the next few years. Given the consequences, accounting firms who rely heavily on their audit practice may want to think about cultivating and diversifying services and clientele. With Blockchain, is there even a need for audits in the future? As with all new and potentially disruptive technology, it's important to understand the opportunities and consequences, as well as how your firm will move forward as adoption of advanced technologies, like blockchain, continue to accelerate.

Embracing disruption While we cannot change the fact that technology is disrupting our profession, we can choose to embrace it and find new, value-added ways to serve our clients. The most successful firms are transforming by moving away from traditional compliance activities and towards strategic advisory roles focused on helping their clients run a better business, improve their personal financial situation, or assess the risks involved with making a change.

So, while blockchain in accounting and audit may not yet be felt, it's never too soon to survey the technology landscape and adjust the strategy of your firm accordingly. In such a fast-paced technological environment, being informed and open to change is really the only way to remain successful.

Voices - Blockchain, accounting and audit: What accountants need to know Among the many disruptive technology trends impacting the way we do business, blockchain is one that is less well known within the accounting community.

Here are some potential uses for blockchain in accounting and audit: Traceable audit trails; Automated audit processes; Authentication of transactions; Tracking ownership of assets; Development of "smart contracts;" and, Registry and inventory system for any asset, ranging from raw materials to intellectual property While many of us associate blockchain with digital currency, like Bitcoin, its potential impact is much wider.

Copy Link. Accounting Today. Mar 27, Media Coverage.

Survey on Blockchain Based Accounting and Finance Algorithms Using Bibliometric Approach

Welcome to ComplianceWeek. This site uses cookies. Read our policy. Blockchain is evolving rapidly from enigma to imperative in financial reporting circles, and one audit firm has even introduced an early audit approach.

How blockchain technology will affect the audit

Matthew Spoke. Matthew Spoke is a senior consultant at Deloitte Canada and is actively involved in the company's internal initiative to explore uses of blockchain technology in accounting. Here, in an article co-authored with his colleague Shannon Steele, he explores why a blockchain-based audit system is the future of accounting. Following the Enron Scandal in October of , something unprecedented happened. For the first time in its modern history, although for a short period, the global audit industry lost its most precious asset: public trust. Although the industry has since recovered, and the rules have changed to limit the risk of another scandal of similar proportions, the potential for auditor fraud, as uncovered in , still remains. Over the course of the evolution of financial markets, primarily in the 20th and 21st centuries, there was an obvious and increasing need for a system of public accountability. Traditional methods of accounting and bookkeeping allowed companies to record and report their financial information in a standardized format that could be more easily digested by public investors; but without adequate trust, the public was often left at the mercy of self-interested businesses. Enter auditors.

Will Blockchain Technology Disrupt Audit and Assurance Services?

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The Future Of Blockchain In Accountancy

Each transaction added creates another block on the chain. Each block is timestamped and once validated, entries cannot be deleted or altered and so it is not possible to cheat the system - therefore making it a verifiable and auditable record of each and every transaction in the ledger. Blockchain technology may impact all recordkeeping processes of a business beginning with initiating a transaction, to processing, authorising, recording, and reporting, thereby providing transparency, efficiency, and cost savings for businesses because of its ability to create the secure, real-time communication networks with partners globally. All businesses need to track information and therefore face the challenges involved in reconciling data with counterparties. The first prominent adoptions of blockchain may transform business processes and legacy systems that are arduous to maintain.

Blockchain and the future of accountancy

This CPE course provides accountants and auditors across the globe with an understanding of the leading practices for providing audit and assurance services to entities using blockchain technology. You will attain the broad relevant knowledge necessary to conduct audit and assurance services, as well as understand and how your role and responsibilities as a CPA may evolve in the future. This is valuable to anyone who needs to understand the implications of blockchain technology and digital assets on audit and assertions services. Download our learning brochure 20 pages which highlights the benefits of investing in AICPA learning and our key solutions. Download the full learning catalog pages. Provides detailed descriptions of all available courses by topic area.

The challenges of auditing blockchain

But as the use of the technology becomes more widespread, it also has the potential to change the audit process itself. To prepare for the changes that lie ahead, auditors need to understand how blockchain works and the benefits it could bring to their work. In the future, blockchain could have an impact on virtually every sector of the economy, but its main use is currently within transaction-based financial services. One of the main benefits of this type of service is its high level of security.

Blockchain – the Future of Accounting

TORONTO, March 15, — A new white paper from the national professional accounting organizations in Canada and the United States, along with the University of Waterloo, finds blockchain technology could potentially impact the audit and assurance services landscape. Blockchain is already starting to affect CPAs and its impact on the profession is anticipated to grow. We are committed to providing guidance to help CPAs navigate these changes and create opportunities for the future. As the paper makes clear, CPAs will need to evolve their skillsets and knowledge to meet the anticipated demands of the business world as blockchain and other new technologies are more widely adopted. The white paper contains a call to action that urges CPAs, including those in auditing, to continue to monitor developments in blockchain technology.

Blockchain offers a drastically new way to record, process, and store financial transactions and information, and has the potential to fundamentally change the landscape of the accounting profession and reshape the business ecosystem. In this article, we introduce two types i. We further discuss implications of blockchain to auditing and elaborate on opportunities and challenges of the two types of blockchain to auditors. We conclude by making specific recommendations for auditors to adapt, adjust, and elevate themselves to the role of strategic partners in blockchain implementation. Known as the underlying technology for cryptocurrencies such as Bitcoin, blockchain has been regarded as one of the most important disruptive technologies after the internet Swan ; Yermack It has wide-ranging implications for data processing, transmission, storage, and security Brandon ; Gross, Hemker, Hoelscher, and Reed , and has the potential to create a new ecosystem for the handling of accounting information Dai and Vasarhelyi ; Kokina, Mancha, and Pachamanova

Citation Information: Adelowotan, M. Blockchain technology and implications for accounting practice. 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.