Blockchain is not here to replace the accounting industry, it’s here to improve it
Deloitte, EY, KPMG and PricewaterhouseCoopers have already started employing blockchain for their operations, is it time for a small to medium enterprises to do so?
Blockchain itself is a tech based on accountancy and bookkeeping. It archives and stores assets, liabilities, transactions, and delivers approaches of recording cash flow and reconciling accounts. It’s in the nature for the accounting industry, which to date has banked on on paper trails and even cloud-based technology, to carry out accounting tasks and transactions and to certify that regulatory demands are met. It’s a tedious thing to do indeed, but auditors require these paper trails as they come in to review the “books.” And, “cooking those books” has always been an issue. As blockchain provides an immutable and transparent record of all accountancy-based data, it offers an opportunity for accountants and CPA firms to streamline their processes and audits, while ensuring that the records are accurate and truthful. This is an amazing improvement over traditional accountancy procedures that can be fraught with errors and fraud, and some of the most noticeable benefits are found in:
1. Enhanced efficiency
2. Minimized errors
3. Easier reconciliation
4. Reduced cost
5. Diminish fraud
6. Improving regulatory compliance
7. Reduced auditing
Early use cases of blockchain in accounting
The aptitude of blockchain technology has caused a steadfast interest by major accountancy firms in its potential uses.
Generally, smart contracts can have an effect on such things as invoices being paid automatically once receipt of goods has been verified. Audits can be much more automated without having to browse through paper trail papers. Auditors will be able to authenticate key information underpinning financial statements, thus reducing both cost and time for the consumers. Regulatory compliance can be verified far more efficiently.
For the given reasons and beyond, the big accountancy companies are investing in a full consideration of the applications of blockchain. If they can offer their clients greater speed and accuracy, then they will retain the competitive edge.
Deloitte, EY, KPMG and PricewaterhouseCoopers — have been appointing crypto and blockchain experts, after they procured dozens of new clients associated to cryptocurrencies in recent months. PwC has brought on as many as 400 blockchain experts to serve clients and their unique needs.
In spite of its apprehensions in regard to regulatory ambiguity in the market, PwC has been the most dynamic professional services conglomerate in the crypto and blockchain space. As a professional accounting conglomerate — the principal business model of PwC revolves around its auditing and consulting services that are provided to high profile corporations in major industries like finance, technology and manufacturing. PwC invested in VeChain, a major digital asset with a market capitalization roughly around $711 million with the vision of employing the IoT-focused blockchain to enable the existing frameworks of its large-scale partners.
In Q3 of 2017, in cooperation with the DNV GL company, Deloitte launched the world’s first solution for digital storage of credentials on the blockchain. Not long after, the company initiated a blockchain expertise center called BlockCenter which was established in Netherlands. More than a hundred experts in the field of programming, auditing, taxes and financial consulting joined in.
In early 2019, Deloitte started reproducing a series of education resources called “An internal auditor’s guide to auditing blockchain”. The document describes the features of the technology and the proper way of using it.
Contrary to PwC and Deloitte, EY has fixated most its efforts on legitimizing the blockchain, by recognizing hazards in using blockchain-based platforms and crypto-related prototypes, like initial coin offerings (ICO).
In Q2 of 2018, the company launched an EY Blockchain Analyzer, a technology “that is designed to facilitate EY audit teams in gathering an organization’s entire transaction data from multiple blockchain ledgers.”
Comparable to block explorers including Blockchain.info and Etherscan, EY Blockchain Analyzer is able to excerpt data from the blockchain to support companies in assessing various types of information processed on the system.
KPMG offered a solution to facilitate the introduction of blockchain technologies in cooperation with Microsoft. The heart for this venture was the Microsoft Azure service. KPMG also mentioned new management in its U.S. Blockchain initiatives to drive and enlarge the business’s blockchain strategy into tax, audit, and advisory. In the following months, the company stressed that with the nomination of Arun Ghosh as the firm’s U.S. Blockchain leader, and David Jarczyk and Erich Braun as the U.S. Blockchain Tax and Audit leaders, it will work with its partners to produce inclusive blockchain strategies and guidance for those interested in it.
Interestingly, all Big Four companies have acknowledged the mounting demand for the blockchain and crypto. However, they are taking different methods to facilitate the swiftly increasing interest in the blockchain space. PwC is taking a more aggressive method to directly integrate the blockchain into current infrastructures of businesses and Deloitte is focused on improving the technical aspects of the blockchain. Contrastingly, KPMG and EY have allocated most of their resources to analyze risk in implementing the technology and creating tools that can ease the process of using the blockchain.
Now, when observing the current status quo in the accounting space from another angle, middle to small enterprises are yet to discover the endless possibilities that blockchain incorporates. They should look up to the big sharks, take the hint, and expand their business activities using the technology which streamlines all accounting tasks.
All accounting firms, big and small, can easily embrace the new technology. Get “trained” in it; endorse it to clients and potential employers. You don’t need to fully fathom the intricacies of the technology — that’s for developers. You need to understand how to use it to your employer’s or your clients’ advantage — this keeps you relevant and in demand. If you are all set to discover how DLT can benefit your accounting firm, CoinPoint invites you contact us today for a no-cost consultation. We are experts in blockchain accounting applications by employing robust educational resources necessary for rendering your enterprise join the top-tier conglomerates.