There is global interest in what a shared distributed ledger means for the accounting industry. With more than 7,000 members worldwide, one need look no further than the American Accounting Association — the premier organization of accounting academics—for proof.
For more than 100 years, the AAA’s members have been responsible for training the next generation of accountants, and now they are making sure that their members are knowledgeable about blockchain technology. I spoke recently with Mark Rubin, Dean of Farmer School of Business, University of Miami (at Ohio), and the current AAA president, who told me that he sees a shift in the way accounting professors are teaching their students. Instead of focusing primarily on content, he said, they are emphasizing skills that will last their accounting students a lifetime, and that includes blockchain technology.
“Our students will make data-driven decisions to drive new business models,” said Rubin. The AAA is committed to helping serve a more prosperous global society, Dean Rubin explained. Accountants do this by ensuring that decision-makers, both internal and external to the organization, have the best financial (and other) data to make decisions about the allocation of resources.
As global finance is re-imagined on a shared, distributed ledger, the work being done by the AAA is part of a bigger-picture movement that will impact the way businesses make investments and allocate resources. Accountants devise the tools and rules with which to capture the economics of the organization. This is where blockchain technology comes in. Blockchain technology has the potential to provide decision-makers with cleaner and more complete data in near real time, which could lead to improved resource allocation, better investments, etc. Because the information is recorded to the blockchain (which is immutable), it is almost self-audited.
Traditionally, accountants have focused primarily on an organization’s journal entries and ledgers, and how the organization’s information flows through those ledgers. They consider the controls that are needed to assure the integrity of information. Shared ledgers on a blockchain will lead to new lines of inquiry in the organization and in the classroom.
In a blockchain-enabled world, accountants will re-examine tried-and-tested accounting processes. They will rethink the way audits are done, reconsider how to attest to data recorded to a blockchain, and re-evaluate how to verify the integrity of financial (and other) data that decision makers rely on. Accountants will broaden their scope as to what was traditionally considered accounting information and also what their role as accountants should be writ large.
Rubin conceded that these are early days for blockchain technology and, as such, it is premature to discuss specific blockchains. Nevertheless, the advent of blockchain technology raises myriad questions for the accounting profession which need to be explored in the classroom and by the academy.
To begin addressing these issues, the AAA hosted an Emerging Issues Forum on blockchain technology in September. Professors came to the conference with some knowledge about blockchain technology, and the firm belief that it will disrupt their industry. The academics were eager to learn key concepts about blockchain technology and how best to incorporate distributed ledger technology into their course curriculum. Some had already begun to teach it.
To leverage the momentum generated by the Forum, the AAA has planned a four-day intensive workshop for summer 2019 that includes a track on blockchain technology. Providing professors with a space to learn about blockchain technology will lead to peer-reviewed research on the intersection of blockchain technology and accounting processes, such as audits of the distributed ledger. Dean Rubin suggested that behavioral research into the way people view and use information that is derived from a blockchain would have value, especially understanding whether information recorded to a blockchain is perceived to be more or less credible than data that is derived from traditional accounting methods.
The AAA is not alone in its focus on blockchain technology. Earlier this year, the Accounting Blockchain Coalition (ABC) was launched to educate organizations on accounting issues related to digital assets and distributed ledger technology. In addition, the Association of International Certified Professional Accountants (AICPA), with more than 600,000 members worldwide, offers a certificate program in blockchain fundamentals for accounting and finance professionals.
This early work on blockchain technology has already begun to spur controversy in the accounting academy, with two distinct camps emerging. In one camp, proponents submit that blockchain technology enables the enterprise to capture rich transactional data (in a distributed ledger) which is used to summarize debits and credits. In the second camp, proponents believe that financial statements are created by capturing transaction details rather than summarizing financial data into journal entries. In my next article, I will delve into these camps to provide a fuller explanation of the two schools of thought and what they mean to the accounting profession and the rest of us.
Dean Rubin can’t predict how accountants will use blockchain technology in the future, but he asserted, “we need to keep our minds open and continually consider how these technologies will impact the accounting profession and the world at large.”
Published on: 2018-10-17 17:01:00
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