For the past year, AICPA leadership has been touting the evolution towards the “audit of the future,” with one of the core discussion points being how Blockchain will be one of the driving technologies behind financial reporting and operating a business in the future. This has been bolstered by a tidal wave of articles describing how Blockchain currencies (primarily Bitcoin) were eliminating traditional banking middlemen, how companies were using Blockchain technology to streamline their supply chain with “smart” contracts, and how it could be used to secure digital rights to virtually everything; potentially disrupting every type of transactional information that accountants traditionally utilize to provide their accounting services. Unfortunately, most accounting firm partners are barely aware of the concept and those that have been exposed to it most often take a “wait and see” approach. This nonchalant attitude could put your firm at a strategic disadvantage by not understanding how it is fundamentally changing the way your clients will do business in the near future, and how your firm’s services will need to evolve to be able to advise clients effectively.
So, what can you do? As a firm manager, we suggest you take a proactive approach to introducing the concept to your firm by educating owners on the basic concept, assigning technology “watchdogs” to monitor developments, attend industry conferences where Blockchain is discussed, and schedule internal learning opportunities for your professional staff.
Blockchain is important to firms because it promotes more accurate information by securely and accurately documenting transactions and minimizing the risk of that information being compromised. Whereas, traditional accounting was done by each of the two parties of a financial transaction documenting their side and “auditing” the other after-the-fact, Blockchain involves “triple” ledger accounting with entries being posted concurrently in thousands of decentralized, distributed ledgers all recording the same Blockchain transactions, which can be independently verified by an auditor that is given access to that ledger. This allows for ALL transactions in the Blockchain to be confirmed in real time with automated tools resulting in a significantly lower cost to verify the accuracy of that information (making the traditional after-the-fact audit process nearly obsolete). A great introductory explanation of the potential of Blockchain is Donald Tapscott’s TED Talk on How the Blockchain is Changing Money and Business.
Assigning Technology Watchdog
SEC Chief Accountant Wesley Bricker stated at a Financial Executives International Conference in New York City: “It is important that those in the accounting profession invest the time to understand new trends and developments in technology and commerce to identify their potential effects on financial reporting to investors.” We suggest having a discussion amongst your partners and assigning the task to monitor initiatives to a specific person within the firm’s assurance and consulting practices to monitor advancements and report to the owners on a scheduled, ongoing basis.
Scheduling Internal Awareness
We have long been proponents of “lunch and learns” as an effective way to do smaller, more concise training and discussions on a variety of firm topics. In addition to technical updates on tax and assurance issues, production tips for practice management, marketing self- development, we suggest you include education on technology disrupters such as Blockchain, Artificial Intelligence, Cognitive Computing and Big Data so your personnel also are knowledgeable on trends and can articulate them to clients.
Attending Industry Conferences
Finally, to expand awareness for both you and your “watchdogs,” we suggest you review the agendas of upcoming accounting conferences and target sessions where Blockchain technology and impacts are discussed. In addition to the vendor user conferences, State CPA Society and accounting firm association meetings, we recommend the CPAFMA National Practice Management Conference, which will be held in conjunction with the AICPA ENGAGE conference to be held in Las Vegas, June 11-14, 2018.
Technology will continue to evolve and most of us have weathered “personal computer,” “paperless,” and “cloud” transitions, noting that each evolution of change seems to be happening faster. Blockchain will be no different and is already disrupting other industries. Make the effort now to educate your personnel so you are prepared when the opportunity arises!
This article was originally published on The CPA Firm Management Association’s (CPAFMA) blog and has been modified for the audience of this blog. Copying or distribution without the publisher’s permission is prohibited.