The world is changing. Blockchain technology is redefining double-entry bookkeeping and transforming it into a system of triple-entry bookkeeping. The overarching pain point of double-entry accounting lies in the reliability of accounting records by different parties. When an economic event takes place, and the transaction is recorded, essentially the same transaction should be mirrored in the counterparties’ books. But in practice, there are discrepancies
Triple-entry accounting aims to solve that by creating a shared transaction record − through the use of cryptographically signed receipts. Blockchain provides the guarantee that all counterparties hold exactly the same information. It’s the implementation of the principle ‘What you see is what I see’.
The shift towards triple-entry accounting is not only important in its potential reduction of manual bookkeeping, but also for its potential to transform the face of auditing. Real-time reporting of accounting transactions, instant payment settlement and immutable transparency and accountability offer unparalleled opportunities for the evolution of the audit function into a real-time process. As opposed to being an annual or periodic activity, auditors and their roles may shift towards ongoing vigilance and provision of assurance over the technology and reporting mechanisms enabling the collection and immediate reporting of transactions.
So, in a world of blockchain technology, digitalisation and Web 3.0, will accountants become extinct? The answer is, it depends. Our survival and success as a profession is built upon our ability to evolve and learn.
Participate in a structured learning experience
There are many professional accountancy organisations (PAOs) and third-party vendors which offer introductory courses to blockchain technology and can provide an easy way to begin to understand the foundational aspects of the technology and may even provide more specific insight into how exactly the practice of audit may be shifting.
Read, read, read!
The first recommendation from insiders to newcomers to the space is to try to read and understand sections 1–6 of Satoshi Nakamoto’s whitepaper titled ‘Bitcoin: a peer-to-peer electronic cash system’. Regardless of your thoughts or perspectives on Bitcoin or cryptocurrencies – the true value of reading such a paper is a very useful explanation of how blockchain technology works and why and how it is created.
Then – as this is a rapidly evolving field, subscribing to key news sites which are active in providing insight and information on the subject of blockchain is important. A quick Google search will turn up a variety of both traditional and emerging media options. Even just once a week reading a short article on the subject and where it is heading may be very helpful to maintaining pace with the changes in this space.
Go to events and network
The last piece of advice is to go to events and network on the subject. Events both hosted by PAOs as well as finance and technology associations on the subject may help to provide broad insight into the evolution, opportunities and challenges.
However, this is just the beginning and therefore we have a massive opportunity to be a co-creator, as we are trained to understand money and markets better than anyone. So, we should not be leaving the creation to the techies as it is in the current scenario. We understand risk and risk management, so instead of re-inventing the wheel and the techies throwing out the baby with the bathwater and making many mistakes in the evolution of Web 3.0, we could be the stewards of the innovation working alongside the technologists.
Author
Monica Singer, Consensys South Africa lead, board member of SAICA and Accounting Blockchain Coalition, and Gabriella Kusz, CPA MBA MPP, Principal for Strategic Initiatives at the International Federation of Accountants (IFAC)
