FRC for you Blogs, Videos & Podcasts Changing reporting: block by block

Changing reporting: block by block

Areiel Wolanow
Managing Director, Finserv Experts

The parallels between blockchain and its related technologies and the dot-com boom are easy to see.  If anything, distributed ledger technology has the potential to be even more transformational, because it stems from the single most central driver for innovation throughout human history: the need for an objective record of agreements between multiple people.  From the digitisation of financial records in the last century to the invention of double-entry accounting in the 1300’s, to the invention of money in classical and pre-classical civilisations, and all the way back to the invention of the written word, humans have strived towards a more objective, more reliable, and more easily shared way of recording agreements.  By making it possible for multiple people and multiple organisations to share a single version of the truth, blockchain and its derivatives promise to be the next huge leap forward in this evolutionary cycle.
Clearly, a transformation of this scale will have a significant impact on how we as accountants, auditors, regulators, and finance professionals do our jobs, but there are two important things to keep in mind.  The first is that our core mission doesn’t change; we still are called upon to provide clarity, transparency, and reliability in the reports and opinions we are asked to undertake.  This will still be our core mission in a blockchain-enabled world.  The principles by which we operate won’t change, just the methods by which we arrive at the desired result. 

The second key point is that, while a shift to distributed ledgers will almost certainly eliminate some of the tasks we are now called upon to perform as reporting professionals, it will also create new opportunities to add value.  Indeed, in a world where multiple parties share a common legal record of their transactions, the need for an independent and objective view is stronger now than ever.  Innovators, IT professionals, and business owners alike are literally crying out for guidance and certainty upon which they may safely make investments in this space, and you as assurance professionals are uniquely qualified to provide it.
The Lab's report won't give you all the answers.  But it should give you enough of an introduction to allow you to start asking the right questions.
As blockchain and the related phenomena of cryptocurrency and ICO’s reach the peak of the hype curve, we find ourselves thinking back to the boom and bust of the dot-com years.  All of that excitement tied back to our shared belief that this thing called the internet was going to change everything.  Looking back 30 years, it is clear our excitement was well founded: the internet has indeed transformed every aspect of how we live our lives.  Yet getting the core idea right didn’t prevent us from spending money foolishly on business models that made no sense.  It didn’t protect us from the criminals and shady operators who are always among the earliest adopters of any new technology.  And it didn’t forestall us from gleefully indulging in what Alan Greenspan famously labelled “irrational exuberance”.