Blockchain: Emergent Industry Adoption and Implications for Accounting

Abstract

Blockchain is a distributed ledger technology poised to transform the accounting practice. In this paper, we provide an initial examination of the technology itself and discuss the associated opportunities and limitations. We also present an overview of the current blockchain-related practices in large accounting firms and trace significant milestones in this technology's emergence. Finally, we discuss some potential areas that future research could address.

Accounting and Auditing at the Time of Blockchain Technology: A Research Agenda

“…By combining the processing of transactions with the recording and reconciling of those transactions, BT introduces substantial efficiencies (EY ; ACCA ; CPA and AICPA ; Kokina et al. ; PwC , ). Precisely, the need for entering and reconciling accounting data in multiple databases is eliminated, whereby time is saved and the risk of human error is substantially reduced (Kokina et al.…”

“…Precisely, the need for entering and reconciling accounting data in multiple databases is eliminated, whereby time is saved and the risk of human error is substantially reduced (Kokina et al. ).…”

“…The automated reconciliation of transactions does not only save time but also substantially reduces the risk of human error (Kokina et al. ; Rozario and Vasarhelyi ). However, in this regard it must be noted that it is unlikely that every transaction will be audited by BT smart contract procedures and undergo automated data reconciliation.…”

“…As a result, both scholars (e.g., Coyne and McMickle ; Dai and Vasarhelyi ; Kokina et al. ; Kozlowski ; Rozario and Vasarhelyi ) and professional accounting bodies and Big 4 audit firms (e.g., EY ; ACCA ; CA ANZ ; CPA and AICPA ; KPMG ) agree that accountants and auditors will not become redundant.…”

Blockchain adoption is inevitable—Barriers and risks remain

“…More specifically, Gencer () explained that scalability refers to blockchain technology's ability to meet a targeted level of throughput (processing output) while minimizing latency (the time interval or delay when a system component is waiting for another system component to perform a task). Kokina, Mancha, and Pachamanova () reported that Visa, Inc. processes 4,000 transactions per second. By contrast, because blockchain technology is computationally intensive, Ethereum (an open‐source public blockchain designed to support decentralized applications such as smart contracts) processes only about 20 transactions per second while bitcoin (another public blockchain application) can process only about seven transactions per second (Rosic, ).…”