A follow on from “block chains and the future of audit”
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Let me set the scene by going over a few bitcoin related concepts before explaining why I think that the accounting profession will undergo a major disruption in the coming years. When most people think about bitcoin, they think about it as a currency. The blockchain is a public, decentralized, distributed ledger that is capable of storing and confirming the transactions that pass through it.
This means that the ledger is not owned nor controlled bitcoin transaction confirmation for auditing any one party. If you see a transaction on the blockchain, the transaction has been confirmed and it cannot be reversed.
If you sent me a bitcoin today, the bitcoin transaction confirmation for auditing will transfer from your wallet to mine via the blockchain and before I receive that bitcoin, miners bitcoin transaction confirmation for auditing the network will confirm its validity. Miners exist in order to secure the network and to confirm the legitimacy of transactions passing through the blockchain.
Miners are users who run computers all day in the hopes of solving complex mathematical equations issued by the network.
As these problems are solved, they are rewarded for their efforts by receiving a predetermined amount of bitcoins. To understand more about how transactions are confirmed, you would need to read up on how mining works.
It pretty much runs on autopilot thanks to the amazing code that backs it. The element of trust. The blockchain is pure peer-to-peer. Just like what Napster did to the music industry, I would expect the blockchain to be doing bitcoin transaction confirmation for auditing exact same bitcoin transaction confirmation for auditing many other industries, only on a larger scale. When we are dealing with the blockchain we are not going through any intermediary except the user on the other end of the transaction.
If I receive a bitcoin from you, it is sent directly from you and into my bitcoin wallet. At the other end of the spectrum, when you look at your bank statement for instance, the balance you see in your account is simply an IOU from your bank, or put another way, a promise to pay you back. We put our trust that this institution will honour this IOU, but why?
Same thing with your insurance policy. Again, why do we trust this third party without even putting thought into it? The blockchain is capable of eliminating this trust factor. On a very basic level, when you have a bitcoin in your wallet, you do not need to trust any third party to hold their end of the bargain. Contracts can be placed on the blockchain and as conditions are met, the terms of the contract are executed.
The important thing to note with the blockchain is that this technology has removed the element of trust. This is why bitcoin as a currency is causing a stir. The blockchain is a technology that has allowed for the creation of a peer-to-peer network in order to transact a currency ie. I am not trying to argue that centralized is better than decentralized and that unregulated is better than regulated; I am simply saying that the technology itself has allowed for the removal of trust with bitcoin transactions.
At its core, the blockchain is simply a ledger. Just like you have a ledger for your accounting records to hold information about your expenses and revenues, the blockchain acts as a ledger to hold information about the history of every single bitcoin transaction. The blockchain ledger can never be altered and records bitcoin transaction confirmation for auditing never be destroyed.
Information can only be added to the ledger, never removed. Before anything can be added to the ledger however, it needs to be validated and confirmed by miners who secure the legitimacy of the network and the transactions passing through it.
At the end of the day, the blockchain is a ledger that stores data that has been verified as true and accurate. We know that bitcoins can be transferred on the blockchain, but you can also bitcoin transaction confirmation for auditing the ownership bitcoin transaction confirmation for auditing just about any asset you want using blockchain technology.
The blockchain is simply a digital way to transfer ownership of bitcoin transaction confirmation for auditing in a more efficient and a more effective way. Other projects are popping up to allow for the transfer of anything of value over blockchain technology. The blockchain that currently fuels bitcoin the currency is just the start.
The innovation that is currently taking place on the blockchain is really just in the early stages. The role of an accountant. The purpose of an auditor is to be an independent third party that verifies whether the financial statements are accurate.
But it cannot be ignored that there is an inherent bias that exists because auditors are collecting fees ie. While our code of ethics, our training and our professionalism is something that we take very seriously as a profession, this bias cannot be ignored.
This is where we circle back to the concept of trust. When an auditor issues an audit opinion on the financial statements and when they say that these financial statements are reasonably prepared, we trust that the auditors have done a proper job and we therefore trust the financial statements. We trust that all internal biases and self-interest has been put aside for the proper protection of the public.
Sometimes this bias does get in the way and sometimes the public is affected by scandals like Enron. In either case, the financial statements that outside investors may be relying on could be inaccurate and therefore not suitable for decision making purposes.
This is where I think the blockchain can play an integral role in how an audit could be conducted and therefore, how the accounting profession can be affected. What the blockchain means for accountants. A financial statement includes various different accounts such as revenue accounts, asset accounts, liability accounts and expense accounts.
Each account holds a variety of transactions that comprise the balance in that account. They might confirm these sales with bitcoin transaction confirmation for auditing clients, they may check your sales invoices and link the money back to your bank account, they may perform a variety of different procedures that they see fit to get comfort over that number and to confirm that these transactions bitcoin transaction confirmation for auditing actually occurred and that they are complete.
As we have seen above, the blockchain can do this by itself, without the use of a third party, in this case, the auditor. As we have already seen that transactions on the blockchain ledger can be confirmed as true and accurate, having a third party such as an auditor re-confirm these transactions would no longer be necessary.
As such, the role of the auditor, and therefore the accounting profession would be completely transformed. The role would, at best, be greatly reduced and at worst, be completely eliminated. Think this all sounds crazy? The bookkeeping position is already being massively transformed, and this is from simple OCR technology. The code behind the blockchain is way more sophisticated and arguably one of the most advanced pieces of tech out there since the internet.
Bitcoin transaction confirmation for auditing possibilities of what it can do is pretty much endless. The impact of the blockchain.
There are those who say that something like this can never happen. But look at where we are now. The blockchain, in my opinion, is the next level of disruption for the profession due to the parallels it has with accounting, which I had listed bitcoin transaction confirmation for auditing.
No doubt, my peers will probably give me a bit of flack on this one. This guest article bitcoin transaction confirmation for auditing written by Ryan Lazanis of Xen Accounting. Uber has halted their autonomous driving tests after a fatal accident. The ride-hailing company said today that a woman was…. Andre Haddad is a master when it comes to connecting a person with what they need.
That might involve helping…. Ryan Lazanis Jan 23 What is this technology? What is bitcoin transaction confirmation for auditing blockchain? The element of trust The blockchain is pure peer-to-peer. A note on ledgers At its core, the blockchain is simply a ledger. The blockchain can hold more bitcoin transaction confirmation for auditing bitcoins We know that bitcoins can be transferred on the blockchain, but you can also transfer the ownership of just about any asset you want using blockchain technology.
Why is this important? What the blockchain means for accountants A financial statement includes various different accounts such as revenue accounts, asset accounts, liability accounts and expense accounts. The impact of the blockchain There are those who say that something like this can never happen.
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