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Betting on blockchain

Blockchain technology could transform financial reporting and audit. Lesley Meall finds out how

Digital technologies are advancing so fast that it can be difficult to keep up – even deciding which technologies to keep up with can be challenging. “You can’t point to a particular technology skill and say that all accountants need to know about it,” says David Lyford- Smith, technical manager, IT and the profession. He suggests keeping a watching brief and not getting bogged down in the nuts and bolts of any one particular technology or system.

One emerging technology that auditors may want to watch is blockchain. “It could fundamentally change the role of the finance function and has huge implications for auditors,” says Hywel Ball, EY’s UK head of assurance. Blockchain technology allows transactions to be securely recorded and logged in real time, so it could improve transparency and trust in a company’s financial accounts. It could also facilitate real-time audit and ‘annual reports’ on a daily basis.

So, what is blockchain? Don Tapscott, co-author of Blockchain Revolution: How the Technology Behind Bitcoin is Changing Money, Business, and the World, describes blockchain technology as “an immutable, unhackable distributed database of digital assets”. A blockchain structures and records data in tamper-proof digital ledgers that are distributed across a network of computers, which makes a database of those distributed ledgers robust, secure and transparent.

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