Finally, we aim to explain what definitions of accounting theory are most used. It is also important to understand all the advantages and disadvantages of joining a public or a private blockchain (O’Leary, 2017). There are many different configurations of blockchain, e.g. peer-to-peer and public, cloud-based, private and these all need to be analysed before they can be soundly implemented in different settings. Further, those investigations must include analyses at the accounting, auditing and supply chain levels. For example, O’Leary (2017) argues that public blockchains are not the best approach to capturing accounting or supply chain transactions. Instead, he believes private and cloud-based blockchain configurations will dominate the corporate landscape.

  • If the result is greater or equal to the target value (pattern), the nonce is incremented and the hash is recalculated.
  • Blockchain has gained a lot of traction despite being a polarizing technology and an elusive concept for many.
  • For the accounting, auditing and accountability sector, 16% consider blockchain creation with hybrid structures.
  • Only 13% are professionals, and, finally, 3% have a mixed scientific-practical affiliation.
  • Tokenized reinsurance markets are poised to replace the traditional broker relationship-based models in the insurance sector.

Reach out to start a conversation, no matter where you are on your journey. What is clear about the potential disruption this new wave of technologies may bring to centuries-old industries is that it is not just a disruption that will force adaptation; it is also a new opportunity for transforming industries so they are more resilient, effective, and valuable.

Blockchain Explained and Implications for Accountancy

There is increasing interest in studying company results and experiences following the introduction of blockchain-related technologies (Casino et al., 2019; Dal Mas et al., 2020b; Marrone and Hazelton, 2019; Schmitz and Leoni, 2019). The blockchain database records the data of organizations and individuals across the world. Academics, together with practitioners, should work on specifying how these regulatory dimensions need to be developed, what type of disclosures are relevant to cryptocurrencies and how disclosure costs may further impact market uncertainty (Cao et al., 2018). Clarifying the regulatory framework will probably also lead to more ICOs, as initiators will be better prepared and be able to respond to uncertainty in blockchain policy by increasing their voluntary disclosures (Zhang et al., 2021; Gurrea-Martínez and Remolina, 2018). Research on the efficiency and effectiveness of ICOs will be of high interest in the future.

The analysis allows us to reconstruct the main lines of research and development. Kokina’s 2017 contribution enables academics to identify blockchain’s application and future development in accounting applications. McCallig, Moll, Schmitz and Kwilinski (Kwilinski, 2019; McCallig et al., 2019; Moll and Yigitbasioglu, 2019; Schmitz and Leoni, 2019) are the main authors that take up these proposed trends. McCalling et al. (2019) investigate how blockchain technology is applied to give security to the transmission of data related to reporting and audit processes, and the public key identified is the cryptography and network analysis. Moll and Yigitbasioglu (2019) deal with future decision-making based on cloud, big data, blockchain and AI technologies capable of legitimizing the work of professionals affecting the work of accountants.

New challenges and opportunities for audit and assurance

Additionally, Arnaboldi et al.’s (2017) contribution stimulates the conversation between academics and accountants considering business processes and digital interactions identifying, for example, the role of big data information and decision-making processes. Using a quantitative approach, Marrone and Hazelton (2019)’s study explores the link between the terms “technology” and “disruption” in the accounting literature, highlighting the research now dealing with blockchain and the aims of managing it. Consistent with our results, their investigation invites future scholars to identify application cases. Although the middle man slows down transactions and adds fees for their services, they’re not all bad. The middle man plays a large role in protecting both parties in the exchange of assets from fraud. This is done securely using a consensus protocol, or a set of rules based on mutual agreement.

Finally, for coding analysis, we use the Deedose web application particularly suitable for ensuring that the inter-rater reliability (IRR) links with the degree of consistency in how the code system is applied (Talanquer, 2014). In the next subsection, we provide an analytical description of the coding framework adopted. Blockchain is one of the most disruptive digital technologies (Carson et al., 2018; Ruzza et al., 2020), and interest in its applicability and effects has grown both from practitioners and academics.

How Blockchain in Accounting Can Help Business Owners

Accounting for cryptocurrencies as cash falls under IAS21 “The Effects of Changes in Foreign Exchange Rates” if one adopts a broad definition of cash that goes beyond legal tender status (Procházka, 2018; Hampl and Gyönyörová, 2021). To determine which articles should be excluded because of irrelevance, we manually analyzed the titles; abstracts; keywords; and, if necessary, the full text of the articles (Booth et al., 2012, p. 99). To do so, we clustered the articles into the categories shown in Table 1, and we excluded those not pertinent to our research questions that had been erroneously captured by our research string. Gabriella also serves as board director at the Global Digital Asset and Cryptocurrency Association, a global voluntary self-regulatory association for the industry where she supports awareness building and education. Gabriella Kusz was a principal, Strategic Initiatives, at IFAC where she supported accountancy’s leadership and innovation in the digital era.

Indeed, Coyne and McMickle (2017) note that a public accounting blockchain cannot be created because entities do not want to make all their accounting entries public and a private blockchain would not increase assurance because it would not be immutable (O’Leary, 2017). As blockchain is a new technology, the first research area aims to discover which accounting and auditing problems blockchain can solve and whether accountants see it as an opportunity to leverage their capabilities or a threat that can make their job obsolete. Figure 1 shows the distribution over time of the included research products. The blue line includes all 346 research products assessed for discussion. The green line represents all 127 research products that belong to the “Accounting and Auditing” topic. The yellow line depicts articles published in journals ranked as “ACCOUNT” by the ABS AJG2021 journal ranking.

This process is likely to take many years – it has already been nine years since bitcoin began operating and there is much work still to be done. There are many blockchain applications and start-ups in this field, but there are very few that are beyond the proof of concept or pilot study stage. Accountants are already participating in the research, but there is more for the profession to do. Crafting regulation and standards to cover balance sheet template blockchain will be no small challenge, and leading accountancy firms and bodies can bring their expertise to that work. Blockchain is a technology that promises to change the way business is done. Deloitte’s 2019 Global Blockchain Survey found that 53 percent of respondents say blockchain has become a critical priority for their organizations (up 10 points from the prior year), and 83 percent see compelling uses for blockchain.

6 Blockchain characteristics

Additionally, blockchain provides opportunities to collect qualitative social and environmental data, which will continue to require assurance in the future. La Torre et al. (2018) argue that blockchain will generate an automatic assurance system for non-financial information that could substantially modify the current assurance paradigm. Therefore, blockchain may help accountants move away “from traditional accounting assumptions, such as monetary unit[s], economic entit[ies] and time periods, leading organisations more towards holistic views of their relations with the society” (McGuigan and Ghio, 2019, p. 800).

Currently, remittances through regular banking channels involve exchange rate fluctuations and costly service fees, in addition to the time delay it takes to transfer money. In contrast, blockchain technology with cryptocurrency eliminates all these obstacles, ensures immediate settlement, and reduces costs significantly. Citi is testing a blockchain project that will allow its institutional and corporate customers to turn cash into digital tokens, making it easier to move money at times when traditional financial markets are closed. For now, Citi’s tokens can only be transferred internally, but the bank is working with regulators and others in the financial industry to create architecture that will allow the tokens to be moved between banks and other institutions. But several companies, the most prominent of which is Web3 services platform Chainlink, have been developing software that connects blockchains with external data.

Figure 1 shows a considerable increase in interest since 2016, in which year accountants and practitioners began to seriously consider blockchain as an accounting tool (Kokina et al., 2017). Second, this study investigates how accounting practice will be impacted by blockchain. Blockchain can improve information timelines and accounting reliability because of its decentralization and transparency, but it will also require new competencies, attention to scalability and accounting standard reconciliation. As blockchain technology continues to advance and new and different uses are found, it will be up to the accountancy profession to ensure that its promises of transparency and accountability are fulfilled. Performing confirmations of a company’s financial status would be less necessary if some or all of the transactions that underlie that status are visible on blockchains. Alongside other automation trends such as machine learning, blockchain will lead to more and more transactional-level accounting being done – but not by accountants.

Financial statements reflect management assertions, including estimates, many of which cannot be easily summarized or calculated in a blockchain. Additionally, no past papers offer a bibliometric with in-depth coding analysis based on the evidence, aims and future research ideas of the previous literature. Of course, for blockchain technology to enable continuous auditing and for it to give auditors a better understanding of their clients’ businesses, companies will need to record all transactions on the blockchain (Schmitz and Leoni, 2019). After all, “real-time auditing” can only be delivered to the degree that transactions are recorded on the blockchain. Two of the most widely discussed topics–“the changing role of accountants” and “the new challenges for auditors”–only seem to be getting more popular.