Data has changed the world significantly. From managing governments to introducing new jobs, data has enhanced society and how we live it. When dealing with finances, an important segment is a transparency. Another main reason people seek experts services when dealing with finances is security. Technology has embedded itself into the culture, and there is no slowing it down, and with said technology emerging comes the importance of securing data. One of the most modern frameworks to secure data is blockchain technology. What is blockchain, and how can accounting firms benefit from it?
Blockchain Technology: What is it?
Information technology has been a core fundamental in the advancement of many industries. Major issues that the technology field faces when dealing with information and data, in general, are transparency, accuracy, and communication. Blockchain is a system developed to store data securely, making it hard to manipulate. This technology is a collection of accounts of transactions transmitted across the blockchain platform. Valuable assets of any nature, tangible or intangible, can be tracked on a blockchain network. Blockchain technology was initially developed to record cryptocurrency transactions before its application was developed to touch on several other sectors such as insurance, government services, and financial markets. Therefore, blockchain is simply an advanced level of information security. The importance of blockchain also comes in its decentralized nature, meaning no natural or legal person owns or controls the information.
Accounting Firms’ Use of Blockchain
Blockchain should be perceived as a tool to be used by accountants instead of a replacement. The importance of blockchain technology is that it presents a faster and more accurate data communication method, making it an ideal tool to track accounts and payments. Some accountants have feared that blockchain will come to replace them soon; however, the need for a “human touch” will always be necessary. It could be argued that blockchain will act as a catalyst to facilitate change in the accountant’s job. The expertise factor in an accountant’s job will play a vital role when introducing blockchain to accounting firms.
Machines can commit to tracking data, but an expert will still be needed to analyze that data and convey the results to the client. More importantly, using the data to make crucial business and financial decisions will still be the domain of skilled accounting professionals. Sure, machines can take care of a lot of work that humans might be imperfect in, but the ability to analyze data related to a specific company or person, with individual concerns, is essential. Preparing invoices, overseeing contracts for payments and accounts receivable, among other duties, are still reserved for accountants.
Accountants can use blockchain technology to manage clients’ accounts by promoting transparency and efficiency. Blockchain could also help to upgrade the accounting practice by minimizing costs and maintaining reconciling ledgers while maintaining records and asset history, making manual data entry easier. Blockchain could help allow an accountant to focus on other areas that blockchain cannot rely on while taking care of simpler tasks. Accountants will be needed to consult and assist in dealing with regulatory frameworks, legislation, and supervisory bodies on behalf of their clients. An accountant’s professional judgment cannot be replaced by a machine.
Accountants now have the chance to oversee the transparency of blockchains. From smart contracts to consolidated bookkeeping, blockchain technology will help accountants make their job a lot easier. An accountant who uses blockchain technology when managing a client’s accounts could be given more time to focus on complex issues on behalf of their clients and not worry about financial fraud, security, or paperwork.
Of course, it may create a need for accountants to increase their technical training to manage the technology effectively. Accountants will have to collaborate with IT units and learn how to speak their language. Accountants have traditionally relied on paper trails to perform their duties, with some experts working on cloud-based technology. It has been said that blockchain will change the world of accounting, shifting it from its traditional practice.
Technology is made by humans to assist humans and not replace them. Due to blockchain’s decentralized nature, who is to be held accountable if something bad happens? Blockchain will not replace accountants; it will simply facilitate their work and help them provide their clients with the most transparent and accurate service possible. Blockchain is not perfect. It was created by humans, and humans are fallible by nature. Accountants will continue to fill the void between clients and technology with their expertise, experience, and skills as we move further into the digital age.
Contact McCay Duff LLP in Ottawa for More Information on How Blockchain Accounting Technology Could Help Your Business
The accounting professionals at McCay Duff LLP can help you understand how blockchain accounting technology could be used to help grow your business and meet your financial goals. To learn more about how we can assist you, don’t hesitate to get in touch with us online or by telephone at 613-236-2367.