The growth and adoption of blockchain technology in the enterprise space is getting up to full steam at the moment. It is also being aided by the likes of the Accounting Blockchain Coalition (ABC), an alliance dedicated to educating businesses and organizations on accounting matters relevant to digital assets and blockchain.
This coalition, which adds another institutional and trusted edge for those looking to enter the blockchain and digital asset space, is in some powerful company hands. The members include BDO USA; BPM USA; ConsenSys; Crowe LLP; Michigan State University Eli Broad College of Business; Microsoft; RSM and Vertex, Inc.
Both BDO and BPM are massive accounting firms in the US, with the latter rated in the top 50 accounting firms and the former boasting 60 offices and more than 400 independent Alliance firm locations nationwide.
The aim of this coalition is to provide guidance on best practices and serve as a knowledge-sharing platform as organizations address the sweeping changes and resulting opportunities created by the implementation of blockchain.
Towards that end, the coalition has now taken a rather large step in making the adoption of blockchain that much easier. It has launched a risk assessment tool that provides accountants, auditors, CFOs, compliance leads, and others, guidance to evaluate digital assets and blockchain technology. More so, and quite impressively, it has it also suggests actions to mitigate threats.
Working to legitimize assets and blockchains
This coalition is, of course, a positive step towards the growth and promulgation of blockchain technology in an enterprise sense. However, it is also pleasing to note that these major accounting, auditing, and technology firms are actively building tools to better the space.
Co-chairman and RSM US’s Bennett Moore said that the purpose of this tool is to assist users who are considering a risk assessment of certain common processes associated with the use of blockchain technology.
The tool can be used as a baseline for businesses using or considering using blockchain technology within their organization. It can help evaluate specific considerations for how their business is organized and how they’re actually using digital assets and blockchain technology.
Other similar tools and documents from various accounting and consulting firms address risk-identification, too, but none of them really try to provide guidelines on internal control activities or suggest actions to mitigate the threats and vulnerabilities identified. It is this added step that ABC’s tool takes that makes it unique.
Why this tool is important?
Enterprises are getting to a stage where they would be foolish to ignore the blockchain revolution that is happening. However, because the space is still so new and untested, it is still quite easy to fall into traps around the technology.
For this reason, a trusted tool, like that of ABC’s, offers a huge weapon for enterprises looking to integrate, good and trusted blockchain technology.
“As blockchain technology continues to mature and deliver real business value to enterprises, it will be paramount that businesses leveraging the technology understand both the new and traditional related IT risks.” Co-chairman and RSM US’s Bennett Moore told me.
“The value of blockchain technology is still primarily process-driven. Enterprises will need to maintain detailed, secure, and efficient processes to properly take advantage of its benefits while maintaining compliance with regulators.”
“The focus of this tool is to help businesses exploring the use of this technology understand the common processes, the associated risks to be aware of, and some potential internal control activities, from a broad perspective, that might be useful in mitigating those risks.”
“The Accounting Blockchain Coalition intends for this tool to be a useful first step in businesses’ risk assessment of using blockchain technology.”
“Blockchain technology is an accounting technology”
Of course, the use of this tool to benefit a range of enterprises is only one side of the coin. It is equally pleasing to see the firms involved in the ABC building such tools and looking to make an impact in the space.
Moore, as the co-chairman of RSM US – the fifth-largest accounting firm in the US – admits that blockchain and accounting have some pretty close ties and that it is unsurprising that the sector is paying attention to this technology.
“The development of this tool certainly points to the fact that the accounting industry is paying attention to this technology and its current and potential use,” Moore said to me. “At its core, blockchain technology is an accounting technology. It has the potential to drastically change the way compliance is supervised and achieved, moving from a point-in-time, retrospective review to a real-time, embedded compliance review.”
“The development of this tool shows that accountants have already been taking the first steps to understanding how the processes associated with blockchain’s use are both new and familiar parts of existing IT risk frameworks. As the use of blockchain continues to proliferate, it will provide new opportunities to match authorizations, supporting documentation, journal entries, and the value transfer components of a business’ transaction on both sides near instantaneously.”
“To achieve the potential compliance, accounting, and legal automation that blockchain could provide, it will be vital that businesses and their advisors understand, review, and plan for the associated risks of using blockchain technology.”
Moving beyond interest
What is also quite apparent with this next big step in the coalition is that enterprises are starting to progress further away from exploring and experimenting; it is now about making meaningful changes with the new technology. Moore explains it as such:
“The vast majority of enterprises engaged in trade organizations like the Accounting Blockchain Coalition are not only evaluating blockchain technology, but also building solutions using the technology.”
He goes on to conclude:
“Accounting firms are building auditing, taxation, and general accounting software solutions using blockchain; technology firms are building software tools to re-think the backend of and the concept of ownership in financial services, supply chains, and numerous other industries; and educational institutions are not only educating on the value of the technology, but also using blockchain to issue degrees and proof of certifications to students’ new smart identities.