Block chain is cryptocurrency based technology that facilitates transfer of ownership of assets and record all the transaction on distributed ledger account accessible to all the participants. We have heard many things about block chain technology since 2017.
With the wide applicability and extendibility now block chain has came up with huge potential to improve the efficiency of accounting procedure. Researchers believe that implementation of Block Chain can reduce the cost of maintaining books of account and internal auditing.
The main aim of accounting is to record all financial transaction and ascertain the financial position at the end of the accounting year in terms of total assets and total obligations with the firm.
In accounting professional faced with the problem of keeping track record of all the assets and liabilities with the changing business conditions. This issue can be resolve using block chain digital ledger which records all the transaction at one place. The records can be accessed by its participants on real time and with updated information.
Researchers expect that Block Chain Technology is going to affect auditing, financial planning and analysis and cyber security in future. Some says that the technology will eat the jobs of auditors.
Implications of Block Chain
Few companies are implementing this distributed ledger technology in Enterprise Resource Planning (ERP) system for better procurement process and suppliers management.it ensures transparency and enhance operational efficiency in procurement process. Many companies are investing on Block Chain Technologies to understand its functions and impacts to improve financial reporting for investors.
Block chain applications can be extended to ensure cyber security and sustainability in this dynamic and digital world. Block Chin technology facilitates visibility of data recorded on the shared ledger and can be verified by other members. It reduces the role of auditors to check the validity of records and open up opportunity to ensure more control and identify the deviations from the standards.
Using Block chain to record financial transaction, increase the attention of accountants towards the interpretation of block chain records, identify the economic valuation of assets and the worth and condition of assets.
Block Chain also reduce the need for preparing reconciliation statement and ensure certainty of transactions. With more certain and accurate data, an accountant can make better decision about the financial position and the further investment in assets.
Block chain is going to change the role and functions of auditors.
Integration of Block Chain with data analytics will improve the efficiency of auditors. As the auditor is not only responsible for checking the accuracy of transactions recorded but also find out the linkages or relationship between different financial item. So, block will provide auditors to understand this and they can ask high level questions.
Block Chain reduce the scope of disputes among different stakeholders regarding record management.it also helps in transfer of ownership of assets using smart contract that reduces the role of intermediary. Block chain technology also provide opportunity to accountants develop block chain led solutions that ensures formation of accounting policies, they can advice the firm on effective implementation of accounting standards and concepts using block chain.
So, Block chain in accounting profession will reduce some of the functions such as keeping track of financial records and verifying the records, and preparation of reconciliation statement, at the same time it provides opportunity to accountants and auditors to improve their efficiency. Some how block will change the role of accounting professionals.