Exploring the Impact and Development of Blockchain on the Accounting Industry

Exploring the Impact and Development of Blockchain on the Accounting Industry(PlatON)

Features: With the development and innovation of blockchain, it has gradually been valued and utilized by many enterprises. The accounting industry is bound to also apply this technology, combining blockchain encryption algorithms, peer-to-peer networks, consensus algorithms, and other technologies, distinguishing traditional accounting models, grasping the direction of digital intelligence, greatly reducing intermediate links, costs, and transaction complexity in transactions, and improving accounting information security:

  1. Decentralization
    One of the notable features of blockchain technology is decentralization. Compared to traditional centralized network systems, decentralized networks are impeccable.
  2. immutability
    In blockchain, all blocks are connected by hash algorithms to form a chain like storage structure. The hash value of blockchain is related to transactions, calculated through hash algorithms based on transactions and other data. When transaction data is tampered with, its hash value also changes, leading to the destruction of the chain structure and ultimately forming a brand new blockchain. So, blockchain has immutability.
  3. Distributed accounting
    Distributed ledger, also known as shared ledger, is a database distributed across multiple computer nodes. Each node can replicate and save a ledger, and each computer can update it independently. Distributed ledgers adopt a decentralized model to ensure the independent construction and recording of each node. In order to ensure that all updated nodes comply with the opinions of the majority, a vote can be taken on the nodes, which is called consensus. Consensus is automatically generated through algorithms, and once consensus is reached, the distributed ledger will be automatically updated. The latest agreed version of the ledger will be saved separately on each node. Blockchain ensures data security through distributed accounting technology.

Application scenario: Blockchain consists of three parts, namely public blockchain, private blockchain, and consortium blockchain. The public blockchain can freely access any node and has the right to read and write any data, ensuring that everyone can participate in the consensus process; Private blockchain defines the boundaries of consensus mechanisms, verification, reading, and other behaviors, which are controlled by an entity and are only open to the internal entities. Essentially, it is also centralized and has little practical application; The alliance blockchain is moderately open to the outside world between public and private chains, which is more in line with the development needs of the vast majority of future industries and has become the most widely used blockchainScenario.

  1. Data security

(1) Data storage certificate

Data preservation can provide a complete business process chain for preservation, verification, and evidence collection. It can be briefly understood as electronic contracts, commodity bills, administrative penalty documents, trusted electronic certificates, etc., which means conducting business on the chain. Using blockchain technology to store accounting information on the blockchain is more resistant to tampering, damage, and loss compared to notarized and third-party certification methods. Due to its data structure, consensus mechanism, timestamp, key and other technologies, accounting information is not affected and can effectively prevent data leakage, thereby ensuring the security of accounting information.

(2) Data certificate

The application of data certificates in the accounting industry is also very extensive, which can be used for uploading and issuing accounting information, as well as encryption, digital signature, etc. The combination of data certificates and blockchain technology can automatically identify whether information has been maliciously tampered with throughout the entire process from issuance to receipt, while confirming the legitimate identity of the other party’s network. It has the characteristics of being unforgeable, non repudiation, and verifiable; It can also be used to ensure safe browsing of the site; It can also be used for enterprise code certification,

Realize the integration of enterprise business license and digital certificate, assist enterprises in conducting online annual inspection, online tax declaration, online customs declaration, and other work.

  1. Financial statements

(1) Eliminating information latency

By applying blockchain technology to financial statements, enterprises can provide real-time financial information, which to some extent eliminates the problem of information delay. This enables financial statement users to timely understand the financial status, operating results, and cash flow of the enterprise, and based on this, analyze its profitability, debt repayment ability, investment returns, development prospects, and other aspects, which is conducive to optimizing enterprise decision-making.

(2) Data transparency

Blockchain technology makes financial statements more transparent, avoiding management from blindly pursuing the perfection of report data and fabricating to reduce R&D and marketing expenses. It clearly and intuitively reflects whether the enterprise complies with laws and regulations, whether there is tax evasion behavior, and facilitates relevant departments such as finance, taxation, industry and commerce, and auditing to supervise the operation and management of the enterprise.

  1. Certified Public Accountant

(1) Ensure business quality

Applying blockchain technology to the digital signature of certified public accountants to achieve paperless office work, the Certified Public Accountants Association can require accounting firms to complete each transaction and submit an audit report to the association when sending it to the auditing unit, achieving real-time reporting of the audit report, eliminating the phenomenon of accounting firms issuing inconsistent audit reports on the same affairs of the same commissioning unit, strengthening industry supervision, and ensuring the quality of accounting firms’ business.

(2) Improving work efficiency by utilizing blockchain technology can also help save costs and improve work efficiency. The current formal audit reports are all paper versions or electronic reports generated by scanning based on this, which are then issued by the accounting firm and signed with the official seal. Finally, they are sent by personnel to the audited unit or accessed at the door. But when using digital signatures, the audit report is in electronic form and can be transmitted at any time, saving costs for accounting firms and audited units and greatly improving work efficiency.

  1. Electronic invoice

By utilizing blockchain technology, the use of electronic bills can be intelligently monitored, with automatic verification and collection, enabling the entire process to be automatically managed. Making tax declaration for enterprises more convenient and effectively reducing their tax risks.

(1) Reduced financial risk

By utilizing blockchain technology, data in the database can be integrated and distributed securely and transparently in the network. The application of asymmetric cryptography technology in blockchain effectively reduces the phenomenon of mismatched ticket times and overselling, avoids credit risks and illegal behavior, and overcomes the shortcomings of traditional bills.

(2) Ensured the accuracy of financial information

Using blockchain technology to store the entire process of business on the chain can effectively avoid accounting errors caused by paper-based vouchers and documents, increase the accuracy of enterprise financial work, and greatly reduce reconciliation costs and error rates, effectively avoiding data leakage and uncertainty caused by data generation.

(3) Improved data transparency

The core of blockchain invoices ensures that invoices are unique, with complete traceability throughout the entire process of invoice collection, invoicing, circulation, entry, and reimbursement. The number of invoices cannot be tampered with, and multiple parties such as the tax bureau, invoicing party, circulation party, and reimbursement party participate in joint accounting. Transactions are invoiced and reimbursed. Once the accounting system is connected to the tax bureau system, all accounting information is automatically generated, simplifying the transaction process, Improved transaction efficiency and ensured the transparency of financial data.