How Will Blockchain Technology Impact Auditing and Accounting: Permissionless versus Permissioned Blockchain

Abstract

Blockchain offers a drastically new way to record, process, and store financial transactions and information, and has the potential to fundamentally change the landscape of the accounting profession and reshape the business ecosystem. In this article, we introduce two types (i.e., permissionless and permissioned) of blockchain and lay out their technological features. We further discuss implications of blockchain to auditing and elaborate on opportunities and challenges of the two types of blockchain to auditors. We conclude by making specific recommendations for auditors to adapt, adjust, and elevate themselves to the role of strategic partners in blockchain implementation. JEL Classifications: M15; M41; M42; O14; O33; O55.

The Impact of Artificial Intelligence and Blockchain on the Accounting Profession

“…The only source of accounting data is guaranteed, and the accounting data cannot be falsified [86] The only source of auditing data is guaranteed, and the audit data cannot be falsified [87] Distributed ledger (Decentralized) [80] Enhance transaction transparency Improvement in the transparency of accounting information [81] Improvement in the authenticity and reliability of audit data [82] Timestamp [83] Clear transaction order Improvement in the difficulty of changing data and retain permanent accounting records [80] Improvement in the reliability and timeliness of audit data, and lay a solid foundation for continuous audit and real-time audit [84] Network consensus [85] Verify transaction legality Improvement in accounting efficiency; provision of real-time transaction clearing or settlement [88] Improvement in the authenticity, reliability and timeliness of audit data, and lay a solid foundation for continuous audit and real-time audit [89] Programmable [90] None…”

“…Intelligentization of accounting business processing through programmability, setting accounting algorithms or accounting business processing rules [80] Intelligentization of audit work through programmability, setting audit algorithms or auditing business processing rules [91] more convenient to obtain audit request information through the blockchain network, and audit requests can achieve minute-level or even second-level responses, which can save information collection and finishing time, thereby improving audit work efficiency [88]. On the other hand, the consensus mechanism for blockchain enables all data to be jointly confirmed the first time, which can guarantee the timeliness and accuracy of the data.…”

Technology-based Practical Blockchain System Audit Maturity Model

“…Audit automation tools were used in a study [4] on SQL tuning [18] and a study [5] on data quality analysis. These studies analysed the database structure, inspected the effects of logical and physical data consistency and the data structure on the performance of SQL tuning and a data quality analysis, and proposed measures to improve performance through the application of audit automation tools.…”

Demand Response Service Certification and Customer Baseline Evaluation Using Blockchain Technology

“…The compliance with GDPR with respect to this issue calls for the use of permissioned BC platforms. BC platforms are indeed currently deployed as permissioned and permissionless [14]; permissioned BC needs prior approval from one entity before taking part to it, whereas permissionless BC lets anyone participate in the system. In permissioned BC, the identity of participants is known in permissionless BC, participants are anonymous.…”