Blockchain Explained and Implications for Accountancy

Currently in the development stages, more than 30 major companies are offering blockchain solutions for businesses in the United States and around the world. Reconciliation of accounting data will not be fully automated through blockchain technology as auditors’ professional expertise and experience is required to assess the accuracy of complex accounting transactions. However, the ability to trust that both parties are recording the same base transaction information and the real-time availability of this accounting data offers immense benefits for the efficiency with which accounting data can be reconciled and analyzed. Due to distributed ledger technology, blockchain technology eliminates the need for entering accounting information into multiple databases and potentially removes the need for auditors to reconcile disparate ledgers. This could save substantial amounts of time and the risk of human error may be considerably reduced.

This element, although mediated by technology, has had positive evidence in both accounting and auditing theory. For example, the consensus mechanism appears to underpin the establishment of the global International Financial Reporting Standards (IFRS) framework (Sunder, 2009). Besides, there is evidence that consensus in accounting has a positive correlation with the accuracy of decisions (Ashton, 1985). The blockchain features show that both cryptography and the hashing process are two elements of protection and assurance concerning the consensus mechanism.

Second, in the field of auditing, starting from Dai et al.’s (2019) and Rozario and Vasarhelyi’s (2018) premises, more research efforts should be made to define how to audit activities integrated into a blockchain system. Such research will be even more impressive when comparing different accounting systems. Besides, interesting RQs will investigate how auditors will manage all stakeholders and how audit activities will evolve. The first focuses on blockchain and its technological features strictly related to decentralized platforms, such as Ethereum, used to share peer-to-peer smart contracts. This section identifies the most cited authors for the accounting, auditing, accountability and blockchain fields, analyzing whether they are scholars, practitioners or both. It also identifies the authors’ keywords, their dominance factor (DF) ranking and the total number of citations.

1 Implications for academics

These papers added an important contribution to our literature review. Here, we searched for “accounting” AND “blockchain” or “accounting AND distributed ledger” over the same period and found 68 papers, some of which overlapped with papers already retrieved. These were excluded, plus we also excluded any of the papers that had subsequently been published in a non-accounting journal or an accounting journal not ranked by ABS or ABDC. Thus, our final sample comprised 153 papers on blockchain for accounting.

… continuously collect data from the real world, create a variety of intelligent modules for real-time auditing, monitoring, fraud detection, etc., and thereby improve the effectiveness and efficiency of assurance services. Lev and Gu (2016) argue that blockchain may reduce information asymmetry and lead to more effective decision-making. The LDA analysis unearthed ten topics, which we needed to find appropriate names for. First, we looked at the terms listed against each topic, then we read the most representative articles for each group identified by the model. One author then developed a descriptive title, which was reviewed and perhaps modified before being approved by the remaining authors. The final topic names are listed in Table 2, along with the 20 most important words for each topic and the marginal distribution of each topic.

  • However, through a cryptographic derivation function, it is still possible to prove the identity behind a party, making them legally accountable for the data they upload.
  • Moreover, Kokina et al. (2017) note that the scalability of blockchain is an issue from a technical perspective, as blockchain is computationally intensive and requires a lot of energy.
  • The sources studied indicate theoretical implications for 47% of the cases, mainly in future research.
  • And in some ways even the, you know, the bitcoin drop was probably a good thing overall for the marketplace.
  • Research on the efficiency and effectiveness of ICOs will be of high interest in the future.

However, especially in light of other SLRs on similar topics, we see an opportunity to perform future in-depth analyses to test new methods, including empirical and quantitative methods. Our analysis reveals that more than two-thirds of the papers under review were published in journals, while less than a third represent works in progress uploaded to SSRN. The top accounting journals from the ABS and ABDC rankings appear to be resistant to the blockchain field of research, as they have published only a few papers devoted to the technology. This could be because those journals are less friendly towards phenomenon-based research (Von Krogh et al., 2012) than fundamental research or that the publication process takes much longer, and we will see more papers in the upcoming years. Another reason could be that most existing articles are normative and are looking at the future applications of blockchain.

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The official interpretation was issued by the IFRS [Interpretations Committee, (2019)], which stated that the only way to comply with the IFRS principles was to account for cryptocurrencies as intangible assets (IAS38) or inventory (IAS2). However, as the IFRS Interpretations Committee (2019) left an opening, in the future, accounting recommendations could change if some countries adopt certain cryptocurrencies as legally tender or entities adopt them as the basis for their transactions. This topic includes 36 research products published between 2000 and 2021. Figure 6 shows a cooccurrence heatmap of the main authors’ keywords (more than five occurrences) in this cluster. Table 3 provides some quantitative data (total citation and CPY) regarding the studies with the highest impact on this topic.

Communities by industry / sector

Their stablecoin and the white paper that they issued, and testimony by Mark Zuckerberg in front of Congress. Like everything, though, there’s lots of different opinions, but I think that’s great leadership. So that’s probably one of the things that is a very, very current topic. Gabriella also serves as board director at the Global Digital Asset and Cryptocurrency Association, a global voluntary self-regulatory association for the industry where she supports awareness building and education.

The results showed that the four topics with the highest marginal distribution accounted for more than half of the overall content of the sample. To test the validity and reliability of this result, we applied several other types of analysis suggested by researchers working with literature reviews. For example, Dumay and Cai (2014) and Jones and Alam (2019) argue that citation impact factors are increasingly important because they identify the most influential articles. Highly cited articles represent a “corpus of scholarly literature” that can help “develop insights, critical reflections, future research paths and research questions” (Massaro et al., 2016, p. 767).


It means there is an immutable evidence trail at all times, so authorities have a paper trail to investigate what happened and enforce the law whenever a dispute arises. Not having a secure exchange medium for invoices opens the door to fraud and drastically inhibits automation possibilities. Today ERP systems and bookkeeping platforms can automate up to 60% of the bookkeeping, but that number can only increase further as the incoming data is entirely digitised and authenticated. Today one of the most significant challenges for companies is sourcing invoices and orders from third parties. These documents come in different forms, from paper or fax to PDF and UBL formats. These external sources must be validated and trusted before a receiver can add the documents to the bookkeeping.

But they will need to know how to advise on blockchain adoption and consider the impact of blockchain on their businesses and clients. They also need to be able to act as the bridge, having informed conversations with both technologists and business stakeholders. Accountants’ skills will need to expand to include an understanding of the principle features and functions of blockchain – for example, blockchain already appears on the syllabus for ICAEW’s ACA qualification. Ablockchain solution, when combined with appropriate data analytics, could help with the transactional level assertions involved in an audit, and the auditor’s skills would be better spent considering higher-level questions.

Combined with manual analysis, these data will help to chart new paths forward for researchers. We agree that blockchain will impact how accounting information is recorded, but we do not expect that accounting functions will disappear. Rather, accountants will likely retain some old functions, either as-is or modified to suit the new paradigm, and find they have an entirely new set of responsibilities, some of which will require them to develop new skills. measure accounts payable management performance with days payable outstanding For example, well-developed IT competencies may become a prerequisite for the accounting profession, at least in the interim period where firms are prepared to face the changes brought about by integrating blockchain (Uwizeyemungu et al., 2020; McGuigan and Ghio, 2019). It will take time before companies implement blockchain as a ‘foundational technology’, and any disruptions to the profession will take place over years (Iansiti and Lakhani, 2017, p. 4).