Accounting isn’t typically thought of as an innovative field. Yet some of the largest accounting firms in the world are moving to ensure the industry isn’t held back from the benefits of blockchain by cumbersome regulation.
To that end, the Accounting Blockchain Coalition has announced the formation of five working groups aimed to help guide the creation of global accounting standards and devise plans for helping regulators gain familiarity with blockchain’s potential use in the industry.
Speaking prior to the announcement at the Blockchain Accounting Audit & Tax Conference on 22nd June, Griffin Anderson, head of blockchain accounting at blockchain startup ConsenSys and founding member of the coalition, told CoinDesk:
“[The groups] are there to support the regulatory bodies and standard setting bodies around the globe and help them, advise them to deliver this technology throughout their institutions.”
Participants of the working groups will be limited to those participating in the coalition, according to Anderson, who added that further details about the topics to be addressed by the groups will be released later this week.
While regulators around the world have begun making public statements about their intentions to regulate blockchain in the accounting space, large-scale guidance still appears to be years away.
And while blockchain is already starting to impact accounting – a fact addressed in panels at the conference that included representatives from PwC, Deloitte, EY, KPMG, Accenture, SAP and Grant Thornton – the industry is at the very early stages of innovating with the tech.
“We’re in the first inning, and accounting hasn’t even come up to bat,” said Scott Zimmerman a partner at “Big Four” accounting firm EY.
Even so, several major accounting firms have taken a proactive stance on the nascent technology.
PwC, for example, sponsored the ID2020 event held at the United Nations last week, and one of its principals, Grainne McNamara, is increasingly being recognized for her support of public blockchain technology like that which powers bitcoin and ethereum.
At the event, McNamara alluded to multiple “live engagements” PwC is currently undertaking to explore the role her firm could play in a world shaped by blockchain. She also elaborated on the single most commonly pursued use case asked about by PwC’s customers.
“Supply chain is getting the most attention,” she said. “Every single client we sit down with we can absolutely find a [supply chain] use case that provides value to the client and their customers.”
Even though individual accounting firms have taken only baby steps so far, Anderson thinks collaboration will be key in making sure regulation doesn’t fall behind innovation.
“We need everyone to come together under a neutral umbrella.”
Accounting & accountability
Part of that collaboration on blockchain means having the ability to hold others accountable, according to Iddo Bentov, co-founder of the Initiative for Cryptocurrencies and Contracts (IC3), who spoke at the conference.
Bentov, also a postdoc at Cornell University, explained that blockchain offers “more potential” for accountability tracking than the centralized systems the accounting industry uses today.
“Right now, in the real world, there is no decentralized system where everybody has to be held accountable.”
Bentov and ConsenSys founder Joe Lubin spent time discussing the merits of platforms including ethereum, Corda and zcash. According to Lubin, by adding some ethereum-based solutions, such as triple-entry platform Balanc3 (already in place at several companies around the world), even relatively basic accounting tasks can be performed with accountability in mind.
While progress on such efforts continues to be made, Lubin conceded that, for now, accounting firms are only looking for low-hanging fruit use cases for blockchain.
Disclosure: CoinDesk is a subsidiary of Digital Currency Group, which has an ownership stake in Zerocoin Electric Coin Company, developer of zcash.
Pressure regulator image via Shutterstock
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