Third, we included articles uploaded to the SSRN database as well as published articles in ranked journals. We are aware that the peer-review process is accepted as a proxy for the quality of published works, especially with respect to academic journal articles (Hart, 1999; Massaro et al., 2015). However, we believe that, given the speed of new knowledge development, especially in the areas of disruptive technologies like blockchain, papers from SSRN added an important contribution to the topics identified. Finally, the validity of the results can only be considered at the time of the analysis, as literature reviews “are not a panacea” (Massaro et al., 2015, p. 546). They only identify the current state of the field, and they only offer pathways for future research directions at a particular point in time. The literature review reveals a pressing need for legal frameworks to govern blockchain technologies and regulate cryptoassets.
- 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.
- The keywords were grouped into clusters, namely, sets of closely related nodes within a bibliometric network.
- Moreover, as highlighted in the Conceptual Framework for Financial Reporting, the principles of prudence, neutrality and conservatism continue to pose challenges for properly presenting cryptoassets in financial statements (FRC, 2018; The Interpretations Committee, 2019).
- For example, in due diligence in mergers and acquisitions, distributed consensus over key figures allows more time to be spent on judgemental areas and advice, and an overall faster process.
This study aims to review the academic literature on the utilization of blockchain in accounting practice and research to identify potential opportunities for further scientific investigation and to provide a framework for how accounting practices are impacted by blockchain. Broadly speaking, financial systems—especially accounting systems—are being pushed from the physical world to the digital world. To some, blockchain represents a “movement” rather than a technology and describes migration to blockchain technology as a form of risk mitigation to avoid technological obsolescence. To others, blockchain technology is essentially about reducing information risk and providing trust regarding accounting data. The implementation of the technology involves addressing significant challenges, but also has numerous potential advantages. At Deloitte, our people work globally with clients, regulators, and policymakers to understand how blockchain and digital assets are changing the face of business and government today.
The studies collected for the review were drawn from accounting journals indexed by the Association of Business Schools (ABS), the Australian Business Deans Council (ABDC) and the Social Science Research Network (SSRN). To help analyse the corpus, we enlist the support of machine learning as found in other studies (Cai et al., 2019; El-Haj et al., 2019; Black et al., 2020; Bentley et al., 2018). From this, we contribute and provide a comprehensive picture and critique of the literature on blockchain in accounting. Identifying emerging topics in the field is an important element in generating insights for future research (Small et al., 2014) and leading research innovations (Cozzens et al., 2010). Understanding what we have learnt and how blockchain technology is impacting accounting is of benefit to everyone connected to this area. Blockchain is not yet a mainstream accounting topic, and most of the current literature is normative.
What is Blockchain Technology?
Finally, the Conclusion highlights our threefold contribution and provides an agenda for future impactful research on blockchain for accounting and auditing. The future of blockchain technology in accounting is poised to bring about significant transformations, extending beyond transactional transparency. Its integration with the Internet of Things (IoT) devices holds the potential to automate real-time data collection, enhancing accuracy and minimizing manual input errors. The evolution of smart contracts will lead to the autonomous execution of complex financial agreements, reducing administrative burdens. Additionally, more real cases will need to be explored to see how technology might disrupt the auditing community (Marrone and Hazelton, 2019). Researchers might also address data protection issues as well as the new skills and competencies needed to remain relevant and add value (Moll and Yigitbasioglu, 2019).
Accountants’ skills will need to expand to include an understanding of the principle features and functions of blockchain – for example, blockchain already appears on the syllabus for ICAEW’s ACA qualification. Ablockchain solution, when combined with appropriate data analytics, could help with the transactional level assertions involved in an audit, and the auditor’s skills would be better spent considering higher-level questions. So, to me, I’ll see the uneven evolution, and maybe people aren’t wanting to see Blockchain 101. But going forward, it will be even more critical for the profession to be involved in the conversation.
A more fundamental area of future research is the role of financial intermediaries and how their role might change. In the future, we expect to see competition and cooperation among traditional and new intermediaries, and research needs to explore these phenomena to provide guidance to all participants such as incumbents, new entries and regulators (Cai, 2018). The influence of blockchain on risk management and companies’ performance indicators is another promising area for future research as there is a need to identify how stakeholders’ value creation may be affected by implementing blockchain (Cai, 2018). It would also be worth examining whether the response of managers towards blockchain varies in different industries (Cao et al., 2018). Burragoni (2017) argues that implementing blockchain in the finance industry might help overcome the threat of a shadow economy, given the improved transparency and legitimacy on offer, but this is an assumption that needs further justification.
Our analysis reveals that more than two-thirds of the papers under review were published in journals, while less than a third represent works in progress uploaded to SSRN. The top accounting journals from the ABS and ABDC rankings appear to be resistant to the blockchain field of research, as they have published only a few papers devoted to the technology. This could be because those journals are less friendly towards phenomenon-based research (Von Krogh et al., 2012) than fundamental research or that the publication process takes much longer, and we will see more papers in the upcoming years. Another reason could be that most existing articles are normative and are looking at the future applications of blockchain. We may assume that, in the future, when there will be more cases examining the actual application of blockchain in accounting practices and real examples of the influence of blockchain on the accounting and auditing field, the number of papers in the leading journals may increase.
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Furthermore, keeping up to date with industry publications and guidance surrounding blockchain technology will help bridge the learning curve for when this technology gains mass adoption. The distributed ledger created using blockchain technology is unlike a traditional network, because it does not have a central authority common in a traditional network structure (see Exhibit 2). Decision-making power usually resides can i get the last 3 months banking statements from an atm with a central authority, who decides in all aspects of the environment. Access to the network and data is subject to the individual responsible for the environment. Some authors (Chang et al., 2019; Kumar et al., 2020) suggest that future supply chain systems will be formed through integrations of blockchain into current systems, and a hybrid system with public on-chain data and private off-chain data will be used.
A transaction cannot be deleted or edited, thereby creating an immutable audit trial. How cryptoassets and cryptocurrencies should be taxed is also open to question (Ram, 2018). Once clarified, researchers will be able to study the taxation policies applicable to this new class of assets in detail. One related research question for the future involves whether blockchain-based instant tax allocation helps to decrease the cost of tax compliance for companies or not (Karajovic et al., 2019).
Prior research points to a growing trend in the topic of new skills for teams when implementing blockchain and using this technology in day-to-day work (Changati and Kansal, 2019). Fang and Hope (2021) indicate that blockchain is more effectively implemented in teams comprising accountants, managers and experienced analysts as opposed to teams consisting only of highly experienced analysts. We expect that blockchain will involve more multi-tasked teams with diverse knowledge and skills to generate additional synergies.
Contrary to other studies, our SLR was updated at the beginning of 2022; therefore, it includes the most recent literature reviews published on the topic. However, especially in light of other SLRs on similar topics, we see an opportunity to perform future in-depth analyses to test new methods, including empirical and quantitative methods. Against this background, the present study is timely, as it aims to review the existing literature on the use of blockchain in accounting practice and research and to define potential opportunities for further investigation. Second, other machine learning techniques could be applied while working with the corpus of literature. Although our LDA approach is much more advanced than mere word count or word cloud methods, it still models documents using a bag-of-words representation.
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Furthermore, governments are typically reluctant to fully embrace financial and monetary changes that they can exert little control over. To have the suite of skills needed in 2021 and beyond, having an understanding of how blockchain technology affects audits is important. Furthermore, accountants with blockchain experience can serve as consultants by helping their clients navigate both implementation and regulatory issues related to blockchain technology. Contrary to what may be supposed of tech erasing opportunities, the automation of auditing allows for bookkeepers and accounting professionals to increase their advisory services to interpret results and train clients. You know, I think in the early stages of blockchain we said this was going to really be massively disruptive because everybody was going to start doing transactions in blockchains. Because you’re going to have a lot of different, probably permission-based blockchains, private blockchains, where people will potentially do some transaction work or supply chain work.
Developing professional knowledge and understanding of this emerging technology and its applications will be crucial to ensuring the profession’s relevance and future readiness. Blockchain’s integration into accounting heralds a transformative era for financial processes. Its tamper-proof ledger ensures data accuracy, reducing the likelihood of errors and fraudulent activities. The automation capabilities of smart contracts streamline operations, enabling accountants and auditors to focus on strategic analysis. As blockchain technology matures, its potential for real-time transaction processing, traceable audit trails, and secure data sharing holds the promise of increased efficiency and transparency in financial activities.
Opportunities range from improved efficiency, transparency and trust to the high potential of new business models and ecosystems that evolve due to blockchain. Challenges include potential risks related to blockchain implementation, the influence of context and a high demand for energy consumption. We agree that blockchain will impact https://accountingcoaching.online/ how accounting information is recorded, but we do not expect that accounting functions will disappear. Rather, accountants will likely retain some old functions, either as-is or modified to suit the new paradigm, and find they have an entirely new set of responsibilities, some of which will require them to develop new skills.
The final topic names are listed in Table 2, along with the 20 most important words for each topic and the marginal distribution of each topic. Massaro et al. (2016, p. 2) characterise an SLR as “a method for studying a corpus of scholarly literature, to develop insights, critical reflections, future research paths and research questions”. The possibilities that blockchain brings to information disclosure, fraud detection and overcoming the threat of shadow dealings in developing countries all contribute to the importance of further investigation into blockchain in accounting.
Central to this accounting approach is the general ledger, a comprehensive record that contains all financial transactions of a business entity. The ledger is organized into individual accounts representing assets, liabilities, equity, revenue, and expenses. Each transaction is recorded in the appropriate accounts, maintaining a clear audit trail of financial activities. Moreover, accountants’ role extends to overseeing the implementation and maintenance of blockchain systems. They play a crucial part in ensuring the accuracy of data entered into the blockchain and validating the authenticity of transactions.