Blockchain: Why You Can't Afford to Ignore It

Like other industries, accounting has had its share of disruptive business forces in recent years, brought on both by technology and an ever-changing regulatory environment. But blockchain may be the biggest disrupter yet. And the consensus opinion is it’s not a matter of “if” blockchain will impact the accounting profession but “when.”

This spring I will present a webinar that explores the threat that blockchain presents to CPA firms and why the accounting profession needs to prepare for its impact. I believe that blockchain technology will inevitably supplant a majority of the traditional processes used for collecting, organizing and reviewing data and information in accounting and auditing services. 

What is blockchain?

Because it’s not something you can “see,” the concept of blockchain can certainly seem abstract. Blockchain is a foundational technology, not a software platform or application. It’s essentially a type of database that keeps recording transactions (a ledger). That database is continuously copied and synchronized onto all the computers (called nodes) in a participating network, serving as a distributed, shared ledger. Another way of thinking of it, albeit simplistic, is as a “triple entry” system.

This webinar will provide participants with an in-depth but understandable explanation of what blockchain technology is and how it really works. I will explore the question of how CPA firms might transform their business models to find new, profitable ways to co-exist and thrive alongside blockchain.

Implications for accounting firms

The ability of blockchain to create a chain of immutable, self-verifying transactions or “blocks” has the potential to upend traditional transactional services provided by CPA firms, such as recording and verifying transactions and ensuring financial and regulatory compliance. The indelibility of transaction records created will make blockchain the trusted source of validated information. This clearly raises concerns for accounting firms:

• What if a major source of your revenue comes from transactional services (e.g., bookkeeping, payroll, tax compliance)? With blockchain, there’s no need to separately process purchase orders, invoices, bills and so on, as transactions are continuously validated, essentially negating the need for many transaction-based accounting services.

• What will happen to your audit revenue? Blockchain will take over the act of collecting, organizing and verifying data, so what will replace revenue from audit services?

• How many of your employees perform transactional accounting or auditing work? How will these employees be re-skilled or reallocated if you no longer have the need for them to perform their current roles?

Ready or not

When will your practice be affected? I estimate it will take five to 10 years before blockchain is widespread and commercially viable. The pace of advancement will likely depend on regulatory developments, cost considerations, and other factors. 

Not only will accounting firms be affected, but clients’ business models will change as well. Companies that deal with digital assets, such as financial services providers, may be among the first types of businesses affected by blockchain.

One thing seems certain: Blockchain is coming. Ignoring it will only put your firm and clients at a disadvantage. This webinar will help you understand what blockchain can and cannot do so that you can prepare for what lies ahead.

Dates and times for Mr. Patil’s webinar will be available soon. For more information, please check our webinar catalog.

For more trends in accounting as presented by Hitendra Patil, read more here.