Advantages of Blockchain Technology for Auditing
Question:
Discuss about the Financial Accounting Theory for Artificial Intelligence.
Artificial intelligence is a type of software that is use to draw results from huge collections of data and thus regulate the tasks according to the results that are obtained by learning. The use of artificial intelligence will also be helpful for the company as it will keep data of every elevator and thus a maintenance crew can be sent to the damaged or inefficient elevators. AI can be of immense help in the process of performance result (Tucker, 2017). The accountants can gain an added advantage of decrease in the time and hence, able to fasten the process.
Blockchain technology is a very creative and safe technology that stores the information in different blocks and stores them in an encrypted form that makes it hard for a thief to exploit the data. The users can make or post transactions in the form of “blocks” which are stored in the database. The transactions when are confirmed, are made the part of the “chain”. They are both irreversible and unchangeable by the user. Afterward there may be a change observed in the block because of the assets but the block will never be removed from the chain it will always stay in the chain. Artificial intelligence may help the auditors to understand the unstructured data and thus may make it available for sampling (Tsai et. al 2011). Artificial intelligence will be helpful in the analysis of the data that the humans cannot interpret. The power of technology will help to learn from the Blockchain data and help it to be protected from the online fraudsters.
As an example, if once a data feuds inside a block then it can’t be altered. There may be corrections made by the users but all the changes will be reflected in a document and thus make the data not possible to be falsified. This makes it easy for the auditor to collect and analyze the information, as the data will never be false. Therefore, some of the tasks that are involved in the auditing may become nonexistent but it will not be possible for the work of auditors to disappear. The transactions made using the Blockchain are three-entry system based as the data is recorded in the books of sender-receiver and the Blockchain. It is also very safe because of the more security factors introduced in the technology (Hood, 2015). Thus stores huge data that may be used by the auditor to make a detailed audit report of the firm.It is not the concern that the Blockchain technology will become diverse, the main concern is to find when it will become diverse. Therefore, it is very necessary for the current tax and accounting systems to understand the application of Blockchain for the future or present use (Tucker, 2017).
If a business of an individual is a lot inclined towards the audit and the transactional services, then he should think of spreading more better or virtuous idea and creativity, which may help him make his work more appropriate, automated, and fast to do. Blockchain may be the best for him to use as it will make it work easy but the use of artificial intelligence and it will keep his work secured and fast. This will also help the accountants to focus more on the strategic advancement of the firm rather than making small and unnecessary bookkeeping functions. Therefore, it is possible by use of Blockchain that the firm’s technological system will be made much useful and accelerated. Still, there are a lot of unanswered question present in the minds of bookkeepers or auditors that are needed to be answered so that the industry may be educated about this new and self-sufficient system which is very safe and efficient for use.
The Need to Understand the Application of Blockchain in Accounting
As in the medical field, the doctors are able to find and treat the people more finely and effectively because of the advancement of technology, the accountancy field will also be very much blessed. With the use of the wonderful Blockchain, system of recording transactions, as it not only helps the accountants to monitor the financial documents of the firm more easily but it also decreases the time utilised, making it efficient for use (Gillon, 2015).
As it is clear that the Blockchain technology is based on the leverages, internet-based and decentralized platform, it will also be made clear that it will be much simpler and adjust to track and discuss the inflows and outflows of a business if using Blockchain technology. The use of the cloud system in the accounting should also be enhancing the use of the Blockchain technology, as it will help the firm to work and take actions logically (Crosby, 2015). The application of these new technologies will not affect the business negatively, but it will help the business and the accountants to work in a much effective manner and thus making them a better and elevated advisor for their works.
According to some of the theorists, the introduction of the crypto assets is actually made to drive and make the regulators and auditors show up. They are actually in need of the certified auditors, CPA’s who may help them to make better, and improved innovations in their system that will be helpful to the public at last (Smith, 2017). Also, it is being believed that the auditing procedures and roles will not become nonexistent in the near future but it may be much more in need because of the help which will be needed by these areas to redefine them (Hood, 2015). Artificial intelligence and Blockchain technologies can make changes in the accounting professions, but the past innovations will be the guide and thus, it will be seen that the jobs will be shifted from one to another rather than their elimination from the management (Barney & Ray, 2015). Also sometimes, if there is an increase in the technological system of the firm, then it is not compulsory for the employment to decrease, but the need of the workers may also increase with a change in technology. The new methods may help us to bring explosive growth in the accounting systems of the company and to make this growth, the accountants will be needed to readjust their skills according to the new ideas and approaches with the data science skills they have (Smith, 2017). The computer is just a toll that can be used by a human to operate the activities; therefore, the main power is of the human. According to some theorists the use of “trust protocol” which is a part of the Blockchain system, will become a regular and integral part of the everyday life by the year 2027. It will have the same importance as the internet is having today. The certified accountants will be made to see a huge increase in the need for testing, authentication, verification, and substantiation procedures are virtually eliminated. Over the coming years, we will see the focus to shift to becoming a “trusted advisor” which a client or public needs. The opportunities of Blockchain in auditing will increase which will be making many changes in the bookkeeping systems in the future (Shaw, 2017). The future auditing system will be a lot different as it will be much more secure, efficient, and easy to use.
Automation is another technology that has a positive impact on the field of accounting. It has re-designed the accounting discipline and bookkeeping. It leads to productivity, as well as cost-effectiveness in the business process when the entire process will be automated specifically in terms of data collection and processing of data. Moreover, this technology will result in a change in the role of the accountant that is the role will be more in terms of a consultant (Peter et. al, 2013). It will add value in the new manner that is giving financial and business advice. Data connectivity is the need of the hour and automation will enable the accountants to see more of the client data through the process of data connectivity. It is irrespective that the data may accrue from any place that is banks, inventory process or management process, the process of automation can help an accountant to have a clear picture and provide the best service (Shaw, 2017). With the merge of automation and AI system, the impact will be highly beneficial for the accounting field. This is because the AI system can trace the pattern with ease and provide the related outcome; it will be merged in the applications as a feature and will be easy to predict the outcome on an accurate basis (Tucker, 2017). Moreover, the integration into an application can help in pinpointing patterns and anomalies on an automatic basis.
Hence, the field of technology is vast and with the due passage of time, the system will be more integrated into nature. The developments in the field of technology will benefit the accountant greatly if the accountants remain updated and embrace the system.
References
Barney, J. and Ray, G. (2015). How information technology resources can provide a competitive advantage in customer service. Planning for Information Systems [online]. 3(2), p. 444-460. Available from: DOI: 10.4236/me.2015.63038
Crosby, M. (2015) Block chain technology. [online]. Available from https://scet.berkeley.edu/wp-content/uploads/BlockchainPaper.pdf [Accessed 21 April 2018]
Gillon, K. (2015) Artificial Intelligence and the future of accountancy. [online]. Available from https://www.icaew.com/en/technical/information-technology/technology/artificial-intelligence-the-future-of-accountancy [Accessed 21 April 2018]
Hood, D. (2018) Brace yourself for AI & blockchain: There’s less threat and more opportunity in emerging technologies than many think. Accounting Today [online]. 32(1), p.30-31. Available from: https://www.accountingtoday.com/news/accountants-need-to-brace-themselves-for-ai-and-blockchain
Peter, R, Alaa S. and Aladdin A. (2013) Business Intelligence and Performance Management:
Shaw, J. (2017). The Blockchain Transformation of Accounting and Auditing. [online]. Available from: https://njcpa.org/stay-informed/topics/article/2017/09/14/the-blockchain-transformation-of-accounting-and-auditing [Accessed 20 April 2018]
Smith, S.S. (2017) Integrating blockchain and artificial intelligence into the accounting curriculum. [online]. Available from: https://www.journalofaccountancy.com/newsletters/extra-credit/blockchain-artificial-intelligence-accounting-curriculum.html [Accessed 20 April 2018]
Theory, Systems, and Industrial Applications, Springer Verlag U.K
Tsai, J.Y., Egelman, S., Cranor, L. and Acquisti, A. (2011) The effect of online privacy information on purchasing behavior: an experimental study. Information Systems Research [online]. 22(2), p. 254-268. Available from: https://www.heinz.cmu.edu/~acquisti/papers/acquisti-onlinepurchasing-privacy.pdf
Tucker, A. (2017) 5 technology trends set to impact accounting most. [online]. Available from: https://www.accountantsdaily.com.au/columns/10008-5-technology-trends-set-to-impact-accounting-most [Accessed 21 April 2018]
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