Blockchain in accounting practice and research: systematic literature review

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. Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private what is profit measures of profit company limited by guarantee (“DTTL”), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as “Deloitte Global”) does not provide services to clients.

  1. Moreover, Kokina et al. (2017) note that the scalability of blockchain is an issue from a technical perspective, as blockchain is computationally intensive and requires a lot of energy.
  2. Today we see the blockchain used in different contexts that do not reach adoption.
  3. We believe it is urgent to fill this gap with systematic insights into the potential of and challenges facing blockchain technologies in accounting practice and research.
  4. Certain services may not be available to attest clients under the rules and regulations of public accounting.
  5. All these positive aspects make blockchain technology a great tool to enhance the traditional accounting system.

Today, and to a greater extent in future years, ledgers managed by private blockchain monopolists can be replaced with public blockchain systems to offer a better choice to enterprise users and allow companies to use blockchains while maintaining complete data privacy. Cai (2021) cites three blockchain systems, but these cases were studied when they were within initial commercial rather than working phases. Because blockchain eliminates the need to enter and reconcile information in multiple databases, efficiency gains are a key strength. Blockchain also saves time by increasing the speed of transactions, reducing human error and minimising fraud (Kokina et al., 2017; O’Leary, 2017).

In fact, three were published in the Journal of Emerging Technologies in Accounting. Additionally, the topics cited match the topics revealed by the LDA analysis, particularly new challenges for auditors, opportunities and challenges of blockchain applications, and the regulation of cryptoassets. Since blockchain is just such an emerging topic in the accounting literature (Schmitz and Leoni, 2019; Bonsón and Bednárová, 2019; Yu et al., 2018), we decided to add papers not yet published in the accounting journals but uploaded to the SSRN. SSRN is the leading social science and humanities repository and online community that provides “tomorrow’s research today” (Gordon, 2016). With more than 950,000 papers from over half a million authors in the e-library, SSRN offers an extensive pool of research ideas that can be tracked before publication to detect emerging research topics and current trends.

The Blockchain Revolution: What is the Future of Blockchain Technology?

Here the blockchain network ensures the data safety of all financial transactions. ISACA said blockchain technology is likely here to stay, the only question is when is the tipping point of adoption. The key feature in blockchain is that anything that is stored on the blockchain is there forever, the information is immutable and cannot be erased. The information that is stored on the blockchain offers us a level of transparency that has not previously been seen. It means that if Person A owns something and transfers the ownership or value of it to Person B there will always be a record in the blockchain that Person A owned it. It also guarantees that the record cannot be manipulated—no one can change the record.

Professional development and skills

The nature of the public blockchain is that it has 100% availability and resilience; this makes for the security argument of a blockchain, as availability is a critical part of security that is often overlooked. The append-only nature of the blockchain ensures actors are held accountable for their actions. When an error is made, an actor can only write a new entry to straighten the record. Interpretation of the data is subjective and, upon a dispute, requires mediators and traditional laws and courts to interpret. Centralising data in a distributed ledger also streamlines data exchange securely and competently. It also implies that the digital signature you use to publish information on the blockchain is connected to your legal identity.

This ease of verification not only enhances audit efficiency but also strengthens compliance efforts and fosters trust in financial reporting accuracy. Smart contracts, a hallmark of blockchain technology, enable the automation of audit procedures. These self-executing contracts can be programmed to initiate audits based on specific triggers or conditions. For example, if a financial threshold is met, a smart contract can autonomously trigger an audit. This automation not only saves time but also ensures a consistent and systematic approach to auditing.

Private blockchain implementations

The system of NFT is designed so that every form of asset is allowed, ranging from games, artworks, collectibles, music, videos, and investments. These days, when the topic of blockchain is discussed, there are terminologies used that did not occur in the early stages of the revolution. Its success eventually led to the birth of others, like Ethereum in 2015, which also included smart contract add-ons, rules, and the automation of diverse, decentralized applications (DApps).

The impact of blockchain on audit practices is profound, introducing efficiency, accuracy, and transparency. By immutably recording transactions and actions on a shared ledger, blockchain enhances the reliability of financial data. Auditors can access a tamper-proof record, reducing the need for time-consuming reconciliation.

Yet many researchers speak positively about how blockchain technology will mean provenance in the supply chain that is much more traceable (Kim and Laskowski, 2018). In our opinion, it will be important for all the agents in the ecosystem to understand how blockchain provides similar benefits. For example, due to the potential risks of disclosing information, we assume that blockchain will have a more restrictive effect on business entities than non-profit organisations, because non-profits tend not to hold as many commercial secrets. 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.

As businesses, auditors, and accountants navigate the evolving landscape, embracing blockchain’s potential has the capacity to enhance trust, streamline operations, and elevate financial practices to new heights. The journey towards blockchain integration is a forward-looking endeavor, empowering stakeholders with the tools to reshape accounting practices and establish a foundation of integrity, accuracy, and efficiency in the digital age. Accountants can leverage automated smart contracts to streamline tasks such as revenue recognition and invoice processing, freeing up time for strategic analysis. The technology’s decentralized nature ensures data security and integrity, protecting sensitive financial information. Blockchain’s real-time transaction processing and traceable audit trails enhance efficiency and transparency.

Therefore, the issue of accountability based on blockchain represents a tremendous opportunity for future research. 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. Furthermore, major complementarities emerge between blockchain and RFID (van Hoek, 2019), IoT and ERP (Kayikci et al., 2022). Through smart contracts, blockchain offers a new way to collect capital from the public without intermediaries that screen projects and mandatory professional entities that evaluate corporate governance practices before fundraising can begin (Subramanian, 2020).

The most representative articles are analysed in Section 5, with future research directions discussed in Section 6. Section 7 concludes the paper with the implications of this research for theory, practice and policy, along with the limitations of the study. Blockchain makes it possible to write verified transactions to a distributed ledger in a secure fashion, without a central authority, between untrusted parties, creating an undeniable past, value for each node and adding value (trust) to those transactions.

In reality, they lost a critical value proposition of blockchain;  they obfuscate transaction traceability by settling large quantities of transactions from one layer into a single transaction on the base layer. You often see organisations advertise blockchain as part of their solution offering. More often than not, they have deployed blockchain technology as a single-point solution in this case.

Three examples of Blockchain in Accounting fails

It combines advanced technology with business processes to generate meaningful and valuable insights in a repeatable and consistent fashion. Despite challenges like scalability, interoperability, and regulatory alignment, the adoption of blockchain in accounting promises an efficient, accurate, and collaborative future. As organizations invest in the necessary talent and infrastructure, blockchain’s role in accounting will expand, driving enhanced transparency and efficiency across financial ecosystems.