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In the last years blockchain technology has become a fruitful digital innovation that could have implications business and enterprises. Read more on blockchain in this article
Small introduction
Blockchain is an upcoming technological innovation that could have major implications for different work fields. Amongst others, accountancy could potentially be reformed by this technology. Needless to say is that accountancy is generally bothered measuring financial information and assuring the correctness of this information.
Blockchain has the ability to store information on a shared platform, called a blockchain, where all peers that are connected to the same network own an exact copy of the information provided in that network. In this way Blockchain has the ability to store transactional information that underlines the financial status of a firm. In other words, transactional assertions do not have to take that much time anymore which means that auditors are able to spend their time on matters that require higher level thinking. Based on this given, it can be said that implementing this innovative technology could provide accountancy professionals with a lot of opportunities. However, before blockchain can even be considered as an integral aspect of the financial world, the technology needs to be further optimized and adapted to be practical for professionals.
Partnerships
Hence, over the recent years accountancy firms have made efforts to forge partnerships with start up firms that specifically work with blockchain technology. So has Deloitte, world’s biggest accountancy firm, forged a partnership with Ava Labs. Ava Labs is the firm that is responsible for the creation of the Avalanche Platorm. The Avalanche blockchain is, just like the rivaling Ethereum blockchain, a platform that utilizes smart contracts to support various amounts of blockchain applications. At this moment, Avalanche is considered to be one of the fastest smart contracts platforms. The developers claim that they have a much faster transaction processing time than the Ethereum blockchain. This means that Avalanche’s scalability is far more superior compared to its competitor.
Deloitte forged this partnership in order to leverage the usage of the Avalanche Blockchain. The reason for this is the fact that Deloitte works together with the FEMA (Federal Emergency Management Agency) to develop disaster reimbursement programs for governmental agencies. Deloitte has created a platform called the CAYG-platform, which is a cloud-based application that provide its legislative partners with a decentralized and transparent system. With the help of the Avalanche blockchain, the CAYG application should be able to retrieve documentation more quickly, under reduced administrative effort, and mitigated risks. In this way, the government agencies would potentially be able to help victims of disasters faster with funding while abuse and fraud would be curtailed substantially.
Other partnerships
Needless to say is that Deloitte is not the only big accountancy firm that has formed strategic alliances with blockchain firms. In 2021, PWC has partnered up with blockchain firm Vechain in order to develop a low-code digital service platform that uses blockchain technology. With the help of this technology enterprises would be able to utilize digitized business models that require the adaption of the innovative blockchain technology. After succesful adoption, enterprises would be able to integrate scattered supply chain data in a rigid and reliable blockchain ecosystem. In this way firms could achieve full transparency over the complete span of the vertical supply chain, which promotes trust among firms and its external stakeholders.
In the same fashion, EY collaborates with Polygon on building and implementing scaling and enterprise solutions for the Ethereum ecosystem. The Polygon protocol provides an easy framework for new and already existing blockchain developments to build in the Ethereum ecosystem with an increased rate of scalabilitity. In a broader sense, this integration would provide users of this framework with much more efficient transaction processes.
Outlook
What is a common issue with adapting new technologies is the fact that generally there are problems with data security and privacy. Another problem would be the lack of technical experts and the lack of clear legislation regarding the use of that new technology. In other words, regulators need a new auditing system that is able to watch over this new Blockchain technology in order to see whether no financial misconduct is taking place.
However, despite the downsides of Blockchain, its potential benefits for the auditing, and makes it far too interesting to ignore this new innovation. A technology that could enable firms to implement a self-running auditing system would save a lot of extra working hours that could be spend in a much more efficient way.
Auditing is just one of the many business areas where blockchain techonology has practical implications. As stated before, this innovation could instigate a big leap forward into technical development that could possibly spur digital innovation in an even faster rate that we have not seen before.
