A new report from the Financial Executives Research Foundation (FERF) analyzes how the rise of blockchain technology and services affects various financial applications. Specifically, the report aims to address the disruptive technology’s impact on fundamental financial reporting systems as well as auditing and accounting practices.
The research paper entitled “Blockchain for Financial Leaders: Opportunity vs. Reality” sponsored by Deloitte, a leading provider of audit, consulting, tax, and advisory services worldwide, is published in conjunction with results of the “Blockchain & Financial Reporting” survey. Together they serve as a starting point for financial executives developing strategies to approach and engage with blockchain technology. Further, the quantitative and qualitative data is framed under three major takeaways that financial executives should understand:
- How and when blockchain is adopted into the everyday financial functions will likely not be known for five to ten years. While 30 percent of the survey respondents plan to commit resources to blockchain within the next year and a half, the technology’s potential within those everyday functions is not yet entirely defined.
- Fundamental precepts of accounting and auditing will need to be adapted or completely rethought to incorporate distributed ledger technology. This includes rethinking related staffing and training strategies—an issue for which only a third of the survey respondents believe they are prepared to address.
- Whether cryptocurrencies double in value or collapse to zero, blockchain will need to be addressed by senior-level financial executives as bitcoin and blockchain are not synonymous. In fact, 64 percent of the survey respondents indicate that they will not be deterred by a crypto “crash” as value remains in the backbone technology.
“Blockchain is a powerful technology that presents numerous areas of opportunity in the financial sector,” said Andrej Suskavcevic, CAE, President and CEO of Financial Executives International and Financial Executives Research Foundation. “This report provides a baseline to help financial professionals understand where we are in terms of vetting, adapting and adopting blockchain. It also encourages them to begin thinking about how open ledger technology and its real-time verification and transactional capabilities can help them excel in their roles.”
The research also investigates the transformative nature that blockchain may have, particularly with respect to how records are maintained, and assets are transferred between parties. Research participants also foresee expanding analytic capabilities stemming from the inherent functions within blockchain, thereby advancing financial reporting.
“Blockchain may one day be seen as an inflection point in accounting and reporting processes,” said Jon Raphael, national managing partner, audit innovation and client service delivery, Deloitte & Touche LLP. “The potential of the technology is broad. However, what the research indicates is that financial executives are approaching this opportunity in an appropriately paced manner. There are still some gaps in connecting traditional systems with newer systems leveraging blockchain. These gaps will likely be closed in the near future with innovative solutions. And, then there is the matter of staffing up with the appropriate talent. A convergence of financial and IT skill sets will, in many cases, best suit the needs of businesses seeking to adopt blockchain-driven processes.”
FERF’s “Blockchain for Financial Leaders: Opportunity vs. Reality” report and corresponding survey are available online at https://www.financialexecutives.org/Research.aspx.
Financial Executives Research Foundation (FERF) is the non-profit 501(c)(3) research affiliate of Financial Executives International (FEI). FERF researchers identify key financial issues and develop impartial, timely research reports for FEI members and nonmembers alike, in a variety of publication formats. FERF relies primarily on voluntary tax-deductible contributions from corporations and individuals, and publications can be ordered by logging onto https://www.financialexecutives.org/Research.aspx.
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Tags: Accounting, Advisory, Auditing, Digital Currency, Technology
