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Section 1. Accounting
https://doi.org/10.29013/EJEMS-20-4-3-6
Dr. Duong Thi Quynh Lien, Faculty of Economics - Vinh University E-mail: quynhlien140679@gmail.com
IMPACT OF BLOCKCHAIN TECHNOLOGY TO FIELD ACCOUNTING AND AUDITING
Abstract. Blockchain technology is viewed as an open and decentralized ledger, capable of recording and verifying transactions without trusting any intermediary. Blockchain technology in the field of Accounting and Auditing reduces most of the probability of errors when comparing complex and different information from different sources. Moreover, accounting records will not be editable and changed once they have been saved to the blockchain, even if the owner of the accounting system requires it. The article addresses the theoretical basis and impact of blockchain on accounting and auditing.
Keywords: technology, blockchain, blockchain technology, accounting, auditing.
1. Introduction chain can have a profound effect on supply chain
Blockchain is a system that can be considered an management and transaction accounting; This tech-
"accounting ledger" - where transactions are made by one party to everyone on the same network in an extremely accurate and confidential way. If a field or a system uses blockchain, security issues will change. Accordingly, we need to focus not only on the assurance of property and the approval of others. Instead, we need to focus on the binding between blockchain records and the physical world, and more broadly on reflecting the true economic value of transactions in the blockchain.
Blockchain is considered a technological breakthrough, set to create changes in accounting and auditing. It is thought that Blockchain can reduce accounting errors and frauds. Organizations like the Australian government research institution, Australian Scientific and Industrial Research Organization (CSIRO) and Australia Stock Exchange (ASX) are studying the application of this technology. Block-
nology can also create opportunities for accountants to work with customers and colleagues to reap the benefits of technology.
2. The concept and characteristics ofblockchain
2.1. Concept
By definition from the wikipedia page: Block-chain, initial name Block Chain is a hierarchical database that stores information in information blocks that are linked by encryption and expand over time. Each information block contains information about the initialization time and is linked to the previous block, with a time code and transaction data. Blockchain is designed to resist data change: Once the data is accepted by the network, there is no way to change it.
Blockchain is guaranteed by the design using hierarchical computing system with high tolerance of byzantine errors. So decentralized consensus can be achieved by Blockchain. Therefore, Blockchain is
suitable to record events, medical records, transaction processing, notarization, identity and proof of origin. This has the potential to help eliminate major consequences when data is changed in the context of global trade.
Figure 1.
The first blockchain was invented and designed by Satoshi Nakamoto in 2008 and realized the following year as a core part of Bitcoin, when Block-chain technology acts as a ledger for all deal. Through the use of peer networks and a hierarchical data system, Bitcoin Blockchain is managed automatically. The invention of Blockchain for Bitcoin has made it the first digital currency to solve the Double Spending problem (spending cheating when money is used twice). This technology of Bitcoin has become an inspiration for a variety of other applications.
Also according to Wikipedia: Blockchain technology is similar to the database, just different from interacting with the database. In order to understand the Blockchain, it is necessary to understand the following five definitions: the Blockchain, the Decentralized Consensus, reliable calculations (Trusted Computing), smart contracts (Smart Contracts) and public evidence. Work (Proof of Work). This computational model is the foundation of creating distributed applications.
As such, Blockchain is a technology to store and transmit information by blocks that are linked together and expand over time, thus being called a block chain. Each block contains information about the initialization time and is associated with the pre-
vious blocks. Blockchain is designed to combat data changes. Blockchain information cannot be changed and only added when there is consensus of all nodes in the system. Even if part of the Blockchain system crashes, other computers and nodes will continue to work to protect the information.
2.2. Characteristics
The first is popularity, Blockchain can provide identical entries for everyone. Regardless of the nature of the information or who receives the information, the blockchain disseminates all the updated information to all who participate in the network.
The second is fixedness, Thanks to the block chain structure, the blockchain fights all information changes once it has been updated into the system. Blockchain does not sign an accounting for an independent transaction after the transaction is confirmed for the previous transaction. Therefore the decentralization of blockchain is very high.
The third is programming, Some typical block-chain such as ethereum blockchain can be programmed to become smart contracts for specific transactions without human involvement.
Especially Blockchain has the ability to transmit data without requiring intermediaries to confirm information. Blockchain system consists of many independent buttons that can authenticate information without requiring "signs of trust". Basically Block-chain is a series of computers that all must approve a transaction before it can be verified and recorded. It's like sending a box that everyone confirms that box is yours and not a lawyer or a bank.
3. The impact of blockchain on accounting and auditing
Recently, news about the blockchain - the technology behind the most "hot" digital currency is gaining much attention. However, one thing that people may know less about is that blockchain technology has a great influence on Accounting and is certainly a technology trend that experts in Accounting and Auditing do not can "ignore" in the future. As Blockchain technology develops, one of the first
areas affected is accounting and auditing. So we learn and evaluate the effects of this technology.
Blockchain can influence auditing profession The block chain creates a real-time traceability record, so if Blockchain technology is widely accepted, the role of auditors in verifying transactions done in Blockchain will no longer be needed. Not only is the accounting and auditing profession facing this influence. Block-chain is a peer-to-peer network that cuts intermediate channels like banks. Australian stock exchanges are considering how Blockchain technology can replace the existing clearing system for stock transactions.
Blockchain can make international payments and money transfers faster, and help authenticate an individual's identity or the company's identity is made safer. That's why the Australian Government and CSIRO research and scientific organization is exploring ways that Blockchain technology can work in government agencies and the private sector. The new blockchain is in its early days on the path of development, but if Blockchain is developed as expected, this technology will dramatically change its accounting and auditing functions. Accountants and auditors will need to reconsider how they work and may need to provide customers with higher value work products related to deep understanding and strategic thinking. Block-chain can open a lot of opportunities.
Blockchain technology is viewed as an open and decentralized ledger, capable of recording and verifying transactions without trusting any intermediary. The technology itself exists as a file to store many of the recorded transactions called blocks. Each block contains a timestamp and a sequence of numbers that leads to the previous block or "fingerprint". Blockchain is designed to disable data modification and cannot be retroactive.
Blockchain technology in Accounting - Auditing greatly reduces the likelihood of errors when comparing complex and different information from different sources. Moreover, accounting records will not be editable and changed once they have been saved to the blockchain, even if the owner of the ac-
counting system requires it. Because on the block-chain platform, every daily transaction is recorded and authenticated, so the integrity of the financial records is guaranteed. In addition to the impressive capabilities mentioned above, this technology also has the ability to reduce or even eliminate the need to audit data source resources.
Here are some applications of blockchain technology in accounting and auditing:
- Audit evidence can be tracked;
- Automatic audit process;
- Authenticate transactions;
- Tracking property ownership;
- Smart contract;
- Registration and inventory system for all assets, from materials to intellectual property
If in an ordinary accounting activity, an accountant needs to write a double entry, then the Block-chain only needs one entry to provide information to all parties without worrying about the authenticity. Accounting records will not be corrected, changed once it has been saved to Blockchain, even if the owner of the accounting system requires it. Because on the Blockchain platform, every daily transaction is recorded and authenticated, so the integrity of financial records is guaranteed.
The development of science and technology along with the establishment of blockchain is bringing positive impacts on the economy in general and the accounting and auditing industry in particular. However, in order to grasp the opportunities provided by this development, accountants must update the trends of these changes to the industry, familiarize themselves with new concepts such as big data (big data), cryptography, the system of ledger (blockchain), payment systems, payment through mobile devices and new platforms connecting providers and users of financial services.
In addition to new opportunities, there are many concerns about the impact of technology on the finance and accounting sectors such as the decline in the demand for accounting personnel (personnel
who play an intermediary role). However, technology does not take away the work of accountants but only contributes to their work more effectively. Accountants do not need to become a true technology expert on blockchain technology, they need to understand the blockchain and its impacts on accountancy to quickly adapt to these changes.
Blockchain application on accounting software
Currently, the use of accounting software in operation is no stranger to any business in Vietnam. The combination of Blockchain technology on accounting software will help accounting work in businesses optimize the security, safety and transparency of accounting information. Most recently, the application of Blockchain technology has started to be deployed on electronic invoicing software. Pioneering in the development of solution solutions and application of Blockchain technology on electronic invoice software has been available. In the field of taxation, MISA developed MeInvoice.vn - the first e-invoice solution in Vietnam that applied Blockchain technol-
ogy to increase the security, safety and transparency of invoices for businesses.
Thus, in order to create a competitive advantage for ourselves in the field of accounting and auditing in the future labor market, in addition to professional knowledge, we need to update information on technology as well as applications. New applications in the industry work environment.
4. Conclusion
Application of science and technology is an inevitable trend in daily work, especially those that always require quickness and accuracy like Accounting and Auditing. Technology is growing, the greater the level of influence is the opportunity and employment of those who have been active in this field. Maybe now, Blockchain has not officially replaced jobs in accounting and auditing, but it is not too soon for us to study this technology and thereby build a reasonable strategy. In the current fast-paced technological context, open and proactive approach to new information is the only way to succeed.
References:
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4. Central Vietnam Accounting and Auditing Association (2018). How does blockchain work? Vaa.net.vn (July 10, 2018).
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