FERF report examines blockchain use by financial execs
The report predicts that fundamental precepts of accounting and auditing will need to be rethought
|Wednesday, May 9, 2018|
By Michael Cohn for AccountingToday.com
The Financial Executives Research Foundation, the research affiliate of Financial Executives International, has released a report in conjunction with Deloitte on how blockchain technology is being employed in financial applications.
The report, “Blockchain for Financial Leaders: Opportunity vs. Reality,” examines how blockchain could affect financial reporting, staffing and other areas of importance to executives. The researchers surveyed a group of financial executives and found 30 percent of the respondents plan to commit resources to blockchain within the next year and a half, though they don’t know yet what potential the technology holds.
The survey also asked about Bitcoin, the cryptocurrency that popularized blockchain technology with its distributed ledger system. When asked whether a significant change in the value of Bitcoin or any negative news tied to cryptocurrency would deter them from exploring blockchain or open ledger technology in the finance function, 64 percent said they would not be deterred.
The report predicts that fundamental precepts of accounting and auditing will need to be adapted or entirely rethought to incorporate distributed ledger technology. That includes rethinking staffing and training strategies. Only a third of the respondents to the survey believe they are prepared to address those strategies. When asked if their organization has the ability to train or hire employees with the right skill set to implement blockchain technology, 67 percent said they don’t have the talent, and only 33 percent said they are ready.
“Blockchain is a powerful technology that presents numerous areas of opportunity in the financial sector,” said Financial Executives International and Financial Executives Research Foundation president and CEO Andrej Suskavcevic in a statement. “This report provides a baseline to help financial professionals understand where we are in terms of vetting, adapting and adopting blockchain. It also encourages them to begin thinking about how open ledger technology and its real-time verification and transactional capabilities can help them excel in their roles.”
The report also looks at how blockchain technology may transform how records are maintained, and how assets are transferred between parties. Research participants anticipate expanding analytic capabilities and advancing financial reporting, thanks to blockchain.
“Blockchain may one day be seen as an inflection point in accounting and reporting processes,” stated Jon Raphael, national managing partner, audit innovation and client service delivery at Deloitte & Touche LLP. “The potential of the technology is broad. However, what the research indicates is that financial executives are approaching this opportunity in an appropriately paced manner. There are still some gaps in connecting traditional systems with newer systems leveraging blockchain. These gaps will likely be closed in the near future with innovative solutions. And, then there is the matter of staffing up with the appropriate talent. A convergence of financial and IT skill sets will, in many cases, best suit the needs of businesses seeking to adopt blockchain-driven processes.”
The report and survey are available here.