Blockchain in accounting research: current trends and emerging topics

Distributed ledgers may not be attractive or even needed by every company, so there is a real need to ascertain exactly what the up and downsides of implementing blockchain are. As O’Leary (2019) observes, the opportunities for using blockchain may be limited by the desire and ability of all agents in the ecosystem to implement it. As shown, all but one of the ten most-cited articles were published in ranked accounting journals. 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.

And in some ways this will be a tipping point for them to go into some of the other areas that Ron just mentioned. 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. … continuously collect data from the real world, create a variety of intelligent modules for https://quickbooks-payroll.org/ real-time auditing, monitoring, fraud detection, etc., and thereby improve the effectiveness and efficiency of assurance services. (2018), “Designing confidentiality-preserving blockchain-based transaction processing systems”, International Journal of Accounting Information Systems, Vol. Tiscini et al. (2020) explore blockchain adoption as a sustainable business model innovation in the agrifood industry.

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. Although “new skills for teams” began to attract attention in 2019, papers on this topic still only account for a small portion of the sample. Interesting, even over such a short period, interest in some topics is already waning, e.g. “FinTech in banking”, “cryptocurrencies and cryptoassets”, and “blockchain and taxation”. With this in mind, and given the overwhelming interest in just a handful of topics, we focused the rest of our analysis on the top four topics. Among the possible developments of this study in terms of the practical and theoretical applications of blockchain technology to accounting, we mention the possibility of overcoming the problem of data privacy through the use of public blockchains.

LDA allows us to explore latent relationships between terms and topics in a sample, identify the most representative articles for each topic and identify the trends within the topics. Using LDA helps us capture the idea of a document being composed of a (predetermined) number of topics that represent a probability distribution over a vocabulary. The number of topics is optimised using grid-search and coherence of topics (Röder et al., 2015). The model also supplies a list of articles that most strongly “belong” to each topic. Portable Document Format (PDF) versions of each of the articles were downloaded and stored in a Mendeley database with full referencing details. When conducting an SLR, it is important to assemble a proper body of literature so as not to bias the results (Massaro et al., 2016).

1. As with any new technology, CPAs will need to acquire new technical skills to process, review, and audit transactions in a blockchain, the details of which will depend upon the services provided.
2. Centralising data in a distributed ledger also streamlines data exchange securely and competently.
3. However, the skills required of accountants are likely to change, and there may be a need for fewer entry-level accountants (Kokina and Davenport, 2017; Marrone and Hazelton, 2019).
4. Wang and Kogan (2018) extend the aim of Dai and Vasarhelyi (2017) to solve the trade-off between confidentiality and transparency and propose the use of zk-SNARK (zero-knowledge verification) schemes and homomorphic encryption.
5. Artificial intelligence has the potential to address these issues in a systemic and comprehensive manner if accountants are flexible enough to adopt these tools.

They may wish to quantify and make visible “feel-good” information as a counterpart to the financial (Smith, 2017). 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. For instance, we do not consider technical, legal or ethical issues, such as the security and privacy of data or the reliability of information entered in the blockchain. Methodologically, the use of the Scopus database does not allow the analysis of a large number of books or book chapters or non-peer-reviewed studies published on the topic of blockchain in accounting. Chang et al. (2019) find that a blockchain-based supply chain process could enable instant tracking, reduce costs related to updating information, improve cash liquidity, enable automatic payments and, in general, improve automation.

Inside each block header, the Merkle root represents a summary of all the transactions included in the block in the form of a hash. To create the Merkle root, hashes of two records are hashed together to produce a hash of the combination, and then the process is repeated moving up the tree until all the records in the quickbooks home office block are represented in one hash. Figure 5 illustrates this process for four transactional records (Trans1, Trans2, Trans3 and Trans4). Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member firms, and their related entities.

Kend and Nguyen (2020) found that auditors are skeptical of the usefulness of blockchain for auditing. Dyball and Seethamraju (2021) highlight that auditors consider clients that use blockchain applications as riskier because there is no accounting consensus about how to address their needs. Therefore, the essential benefits perceived by practitioners are unclear but seem to include reductions in time-consuming activities and the need for additional opinions.

How Will Blockchain Technology Affect The Accounting Industry?

Applying the exclusion and inclusion criteria, we detected 147 highly relevant studies and accessed 142 full-text items (5 were not available from our institution). We read and analyzed each item, and we present the key aspects of our analysis adopting a narrative approach and discussing them by topic. Figure 2 represents our steps using a PRISMA diagram (Page et al., 2021), which we adjusted to enhance its fit for a qualitative systematic review.

Deloitte COINIA and the future of audit

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.

Professional development and skills

This will streamline supply chains, simplify auditing procedures, and enhance transparency in global financial transactions. The technology’s potential for automating regulatory compliance, through Regulatory technology (RegTech) solutions built on blockchain, will reduce compliance costs and enhance data accuracy. 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.

Approved transactions take the form of blocks added to a chronological chain of previously validated blocks through the use of cryptographic signatures (Bonsón and Bednárová, 2019). 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.

Other authors have also proposed different ways of applying blockchain technology in accounting and auditing (e.g. Yu et al., 2018; Kokina et al., 2017; Faccia and Mosteanu, 2019; Bonsón and Bednárová, 2019), without offering a comprehensive overview. Similarly, Bonsón and Bednárová (2019, p. 737) conclude that “blockchain is an under-explored phenomenon, [and] future research is necessary to obtain a full understanding of this emerging technology and its implications for the accounting and auditing sphere”. New technologies and digital innovations are gradually reshaping the contours of accounting, auditing and reporting (Bonsón and Bednárová, 2019; Dai and Vasarhelyi, 2017; Lombardi and Secundo, 2020; Mancini et al., 2021; Marrone and Hazelton, 2019). Among the emerging technologies able to revolutionize business models and consequently change the processes underlying management control, accounting, auditing and reporting is blockchain (Schmitz and Leoni, 2019). A blockchain is a distributed digital ledger shared by several peers in a network that facilitates transaction recording and property tracking for tangible and intangible assets.

Individuals and organisations can choose which QTSP they want to attest to their digital signature on the blockchain. This introduces a network of portable digital signatures that can be interfaced, trusted, and leveraged in multiple applications and interfaces. This brings trust not only to exchanging invoices but could be extrapolated to any information type, from media to articles, to credentials and any other type of asset. Layer-two solutions pretend they have the same level of security because they are anchored to a base layer blockchain protocol with many nodes. 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.

This effectively means that Person A has a copy of all of their information as does Person B, and as does the next person. In a decentralized environment, all participants have access to the same information and users can then choose to share it or not. Information will no longer need to be aggregated and stored in central databases as it will be stored everywhere at once and, if desired, under direct user control rather than the company offering the service. So I actually think we’re in a good state, and I think this is excellent that we can, the firms can start working on this initial use case in a much broader way. There’s been firms doing work in the cryptoasset category, but now this is going to make it much wider spread. And I think as they understand how to meet the compliance needs related to cryptotax, they’re going to get a better understanding of cryptoassets, the blockchain category.