This article is part of our Blockchain In Accounting series where industry experts give their take on how blockchain is changing the accounting industry and predict what's coming in the future.
Here's what they've shared:
1. Erich Braun, Audit Partner at KPMG US
“Companies must consider developing guidelines and controls while they are building a blockchain process. This governance in the planning and design phases of the systems development will help provide a better structure and framework for the technology.
Blockchain technology should be developed with the intent to meet both operational and accounting needs, and thus built to comply with auditing standards and designed to support the entity’s internal controls over financial reporting. This is critical to a successful blockchain strategy. If the technology is not auditable, the immense benefits it brings, such as increasing efficiencies and cutting costs, may not be realized.”
2. Steve Briginshaw, CEO of Clarity Project
“There is no denying that the accounting industry is seen as a traditional space. According to the FRC’s July 2017 report of Key Facts and Trends in the Accountancy Profession, over 60 percent of members of the Institute of Chartered Accountants in England and Wales (ICAEW) are 35+ years in age. Arguably, these statistics support the reasoning behind why the accountancy profession remains conventional and reluctant to change.
Resistance could stem from disinterest in new innovations, or it could also be because there has been so much change recently with auto-enrollment, Financial Reporting Standard 102 (FRS102), and Maxing Tax Digital (MTD) that it is tedious and hard to keep up.
The challenge for blockchain is not that it isn’t useful – there are many use cases for the technology in financial services and outside of accounting such as ID verification in Estonia. [The question is] whether accountants are willing to go through another innovation and change in their industry.”
3. Paul Banker, General Manager of Tax Reporting in Sovos
“The accounting and finance industries have long relied on manual exception processing, reconciliation and auditing processes. The industry is also driven by clear regulations, yet emerging technology such as blockchain and cryptocurrency lack this clarity.
For instance, regulations surrounding tax information reporting for tradable assets on blockchain technology such as bitcoin and other cryptocurrency are murky. Language is ambiguous, and specific reporting requirements are unclear. The IRS promises to offer clarity, but the timing of any new information is still uncertain.”
4. Steve Saah, Executive Director at Robert Half Finance & Accounting
“A major challenge facing accounting functions is a dearth of blockchain expertise. Being relatively new, many professionals have not had the opportunity to develop deep knowledge in this area or the skills to apply it.
There's also the issue of companies needing to define the specific blockchain expertise they need. If they can't define it, they can't hire for or develop it. In the race to attract professionals with the latest technological acumen, companies that haven't figured out the type of skills they need may already be getting left behind.”
5. Scott Nelson, CEO of Sweetbridge
“The primary challenge to the adoption of this technology in the accounting industry is the scalability of a blockchain-based solution. Auditors and those within the industry will need reassurance that the technology will reliably match the output of current audit services, and we are confident it can not only do that but will provide better quality assurance to financial ransactions.”
6. Chris Cardinal, EVP of Software Engineering at AbacusNext
“Regardless of access to expertise, few companies will embrace blockchain with total confidence due to the exceptionally high regulatory requirements. This means companies with advanced blockchain teams will offer those services to others.”
7. Daniel Smith, Head of Innovation at TheoryLane
“In my opinion, there are no technological barriers to blockchain adoption. The primary hurdle to adoption is a lack of definition regarding return on investment. The current costs of implementation are high and the benefits are still ambiguous, largely because there isn't widespread adoption.”
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