Part I: The Changing World of Accounting
Dear Intrachain Community,
As we have all witnessed: Industries change with the emergence of technology. This of course also applies to the accounting industry which is continuously transforming as technology evolves and client demands shift. The technology that is currently changing the accounting world is the blockchain technology. More specifically, it is revolutionizing accounting.
But why is that the case? It is because wherever data is stored, there is an opportunity for blockchain to take over. And this is especially significant for industries, for instance, the financial sector, where interoperable data is needed. I believe that through blockchain, especially accounting is about to undergo disruptive change. However and even though the blockchain technology has caught the attention of the largest financial authorities, it’s use cases still remain in a more experimental stage. In the following, I want to explain the benefits of blockchain in accounting across various industries.
As stated above: the digitalization of accounting systems is still in a very premature phase compared to other industries that have already been disrupted by the advantages the technology brings along. This lack is rooted in the fact that the regulatory requirements are extremely high in regards to integrity and validity.
Current accounting practices all focus on guaranteeing that forgery is nearly impossible. This requires mutual control mechanisms, as well as checks and balances which inevitably has huge effects on daily business. These current mechanisms include for instance systematic duplication of efforts as well as extensive documentation and periodical controls. All of these controls are manual and labor-intensive tasks that are far away from being automated.
Consulting firms such as Deloitte forecast that the recently emerged blockchain which is a trustless, distributed ledger that is openly available and has negligible costs of use, is immensely promising for accounting use-cases. According to their research, in daily business this technology would, for instance, enhance the prevalent double entry bookkeeping which is a costly auditing system on which modern finical accounting is based on.
Against the background of this finding, I believe that the blockchain technology represents the next step for accounting. Companies can now write their transactions directly into a shared register, instead of keeping separate records based on receipts. This practice will then create an interlocking system of enduring accounting records. Due to the fact that all records are disrupted as well as cryptographically sealed, falsifying or destroying them is impossible.
If companies apply these practices they would benefit in many ways: firstly, it would allow auditors to verify a big amount of the most important data behind the financial statements automatically. Secondly, the time and cost revolving out of conducting an audit would decrease considerably. And finally, it would offer auditors the possibility to spend time on areas they can actually add more value.
In next week’s Blog post I will explain more benefits blockchain can bring to the accounting sector. I am also going to highlight on Intrachain’s process mining software with integrated blockchain will be the main driver in revolutionizing the accounting world. Stay tuned!
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I will keep you posted on exciting angles of the Blockchain Industry. In the meantime, feel free to contact me on Telegram to chat with me and my Co-Founders.
