In accounting, blockchain technology can offerorganizations more verifiable transactions withbanks, customers and even internal parties.4This kind of verification can also be useful to external andinternal auditors when they trace transactions toverify their authenticity. We agree that blockchain will impact how accounting information is recorded, but we do not expect that accounting functions will disappear. Rather, accountants will likely retain some old functions, either as-is or modified to suit the new paradigm, and find they have an entirely new set of responsibilities, some of which will require them to develop new skills. For example, well-developed IT competencies may become a prerequisite for the accounting profession, at least in the interim period where firms are prepared to face the changes brought about by integrating blockchain (Uwizeyemungu et al., 2020; McGuigan and Ghio, 2019).

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. Here, we searched for “accounting” AND “blockchain” or “accounting AND distributed ledger” over the same period and found 68 papers, some of which overlapped with papers already retrieved. These were excluded, plus we also excluded any of the papers that had subsequently been published in a non-accounting journal or an accounting journal not ranked by ABS or ABDC. The introduction of distributed ledgertechnology, or what is known as blockchaintechnology, has challenged current methodsof doing business. Ifthe adoption of new technologies such as blockchainchanges the process of conducting transactions,accountants and auditors should understand thechanges to correctly reflect them in their work. If they donot, they will not be able to test controls included in thetechnology and trace financial transactions recordedusing the blockchain, meaning they would not be able tocorrectly perform most of their work.

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Rather, they suggest that auditing will take on new features and become more complicated (Dai et al., 2019; Issa et al., 2016). Distributed public recording on the blockchain will allow real-time audits in many locations and organisations simultaneously (Issa et al., 2016). These authors nostro account definition argue that auditors will need improved skills to audit the data not only for one company but also for the whole accounting ecosystem.

Blockchain Technology in Financial Accounting: Enhancing Transparency, Security, and ESG Reporting

Even if they are recorded onto blockchains, transactions may still be fraudulent, illegal or unauthorised. Hence, given inventory turnover ratios for ecommerce the need for auditors to detect and investigate transaction errors or fraud, the argument of auditors becoming obsolescent is not evident. Section 3 outlines the methodology used for the review, followed by the results in Section 4. The most representative articles are analysed in Section 5, with future research directions discussed in Section 6.

About Blockchain & Digital Assets at Deloitte

It also guarantees that the record cannot be manipulated—no one can change the record. This level of immutability is why blockchain technology is commonly referred to as a “trust machine”. Another accounting aspect that blockchain haschanged is related to the delivery of goods andservices to customers. The receipt of goods andservices can now be confirmed by customers directlyby verifying the delivery transaction in the blockchain.In addition, the execution of contracts with supplierscan be completed using smart contracts in theblockchain. This execution is done according to theterms and conditions of the contract embedded inthe code of the smart contract in the blockchain. The basics of accounting and auditing are notaffected by the implementation of blockchaintechnology;2however, blockchain does add risk toconsider and controls to test.

1. In the future, it will be important to monitor the progress of the implementation of blockchain in different types of organisations (Gietzmann and Grossetti, 2019).
2. The simultaneous protection of data privacy and maintenance of data accuracy is an important area for future research.
3. Additionally, just because a transaction cannot be modified, that provides no assurance that it was entered properly in the first place.
4. In December 2017, SEC Chairman Jay Clayton stated that ICOs are vulnerable to fraud and manipulation because there is less investor protection than in the stock market (Clayton, 2017).
5. Gabriella Kusz was a principal, Strategic Initiatives, at IFAC where she supported accountancy’s leadership and innovation in the digital era.
6. We are aware that the peer-review process is accepted as a proxy for the quality of published works, especially with respect to academic journal articles (Hart, 1999; Massaro et al., 2015).

As discussed in Section 5.1, most papers on the changing role of accountants are normative. They talk mainly about various assumptions over how blockchain may influence accounting. One of the main changes frequently discussed is how blockchain will change the way accountants collect information.

The disruptive potential of accounting technologies can only be fully realised with a similarly profound revolution in accounting thinking. Without an accompanying “mental revolution”, new technologies may result in incremental as opposed to step change. The LDA analysis unearthed ten topics, which we needed to find appropriate names for. First, we looked at the terms listed against each topic, what is the income summary account then we read the most representative articles for each group identified by the model. One author then developed a descriptive title, which was reviewed and perhaps modified before being approved by the remaining authors. The final topic names are listed in Table 2, along with the 20 most important words for each topic and the marginal distribution of each topic.

There are many different configurations of blockchain, e.g. peer-to-peer and public, cloud-based, private and these all need to be analysed before they can be soundly implemented in different settings. Further, those investigations must include analyses at the accounting, auditing and supply chain levels. For example, O’Leary (2017) argues that public blockchains are not the best approach to capturing accounting or supply chain transactions. Instead, he believes private and cloud-based blockchain configurations will dominate the corporate landscape. In a private blockchain, only a preselected number of nodes are authorised to use the ledger. 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).

As such, a literature review on the status of blockchain in accounting is both topical and timely. The insights provided into this emerging technology will have implications for the accounting ecosystem–some beneficial, others challenging. Hopefully, this SLR will serve as a helpful baseline for practitioners, professionals and academics as we navigate the next potential revolution in accounting information systems. The authors identify current trends, analyse and critique the key topics of research and discuss the future of this nascent field of inquiry. What could be an even more profound transformation of the profession is how the work of accountants might no longer involve only recording transactions. In future, accountants may need to provide professional judgements during the accounting process (McGuigan and Ghio, 2019; Dai and Vasarhelyi, 2017).