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The Financial Executives Research Foundation (FERF) has released a report prepared in partnership with one of the ‘Big Four’ accounting and consulting firms Deloitte, on how blockchain technology is being employed in financial applications, Accounting Today reported May 9.
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.
Andrej Suskavcevic, president and CEO at Financial Executives International and Financial Executives Research Foundation said:
“Blockchain is a powerful technology that presents numerous areas of opportunity in the financial sector,” said Andrej Suskavcevic, CAE, President and CEO of Financial Executives International and Financial Executives Research Foundation. “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 research also investigates the transformative nature that blockchain may have, particularly with respect to how records are maintained, and assets are transferred between parties. Research participants also foresee expanding analytic capabilities stemming from the inherent functions within blockchain, thereby advancing financial reporting.
According to the report, survey participants anticipate utilizing blockchain in order to expand analytic capabilities and advance financial reporting. Jon Raphael, national managing partner of audit innovation and client service delivery at Deloitte & Touche LLP said:
“Blockchain may one day be seen as an inflection point in accounting and reporting processes. 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… there is the matter of staffing up with the appropriate talent…”
Recently, another ‘Big Four’ firm PricewaterhouseCoopers, acquired a minority stake in Chinese blockchain service provider VeChain. With this move, PwC reportedly intends to integrate VeChain’s service platform into its infrastructure, which will require the use of VeChain Tokens in order to access and perform transactions.
Conversely, according to a recent Gartner survey, 77 percent of polled chief information officers (CIOs) have “no interest in the technology and/or action planned to to investigate or develop it.”