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Voices What accountants need to know about blockchain

By Sean Stein Smith
Published October 16 2017, 348pm EDT

More in Blockchain, Bitcoin, Financial reporting

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The phrases blockchain and artificial intelligence are mentioned so frequently in academic articles, practitioner publications and the
general media landscape that they may have overshadowed the previous hot topic of data analytics.

With all of the coverage, debate and questions surrounding these areas, it would be relatively easy to get lost in the weeds with what
these technologies mean for the accounting profession. In addition to, and compounding, the potential confusion surrounding these
topics is the somewhat justifiable fear that these technologies will automate large functions of the accounting profession. Accounting
professionals, trained and educated in quantifying data, analyzing different streams of information, and increasingly technology savvy,
are facing the reality that technology may surpass, and ultimately, replace many practitioners.

Such a perspective, however, only represents a partial and incomplete view of the implications that blockchain and artificial intelligence
will have on the profession. Bitcoin may be the most commonly associated term and aspect of blockchain technology, but that only
represents the proverbial tip of the iceberg. Although some organizations are indeed using bitcoin for processing transactions, are
accepting payment from customers in bitcoin, or the other various cryptocurrencies, this is only one potential implication for the
accounting profession. Regardless of whether an accountant works in public practice, private industry, academia or a consultative
capacity, it is critically important to understand the potential changes that are coming.

Blockchain technology has the potential, and already is, changing how the accounting profession operates and will navigate the
business landscape moving forward. While the specific implications of these changes will differ from organization to organization, and
some of these changes will occur faster than others, there are some themes that appear to be consistent. Clearly, this short list is not
meant to be all-encompassing, but rather is meant to focus the conversation on the changes blockchain is having in a manner that is
productive and applicable to practitioners.

To do that, however, accountants need to understand what exactly blockchain technology is, and what is might mean for the profession.
Lets take a look at three things every accountant needs to know about blockchain

1. Blockchain secures information and reduces alterations.

Although the basis for the spread of blockchain technology is the internet, and some uses have involved criminal enterprises, the basis
of the technology is the encryption that secures transactions and records. To put it simply, every transaction that is conducted using
blockchain technology is encrypted, the involved participants are identified by a string of characters, and after a certain period of time
has passed (which may vary) all of these transactions become part of the block. After this block has been finalized, it is broadcast to all
parties associated with that network, or chain. If it is altered at a future date, reviewers of the block (record) will be able to identify when
due to time stamp functionality. Clearly this technology will lead to changes in not only how audits are performed, but will also
drastically reduce the amount of time needed to verify or confirm certain balances.

2. Blockchain will reduce errors.

Especially as it pertains to accounts payable or accounts receivable, the potential for blockchain to be accretive from the very
beginning is a relatively straight forward concept. Building on point 1, if the participants in a certain transaction are identified, the time
and date of the transaction is verified, and the associated data is secured, the possibility of errors decreases dramatically. Specifically,
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the number of transposition corrections, verification of payments, and other lower-value activities can be automated by Login
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ultimately replaced with higher-value activities. Reducing errors, both during the audit process itself as well as during ongoing

operations, will add value to clients in a quantifiable manner. This may certainly place some current accounting jobs in jeopardy, but
also provides numerous opportunities for accounting practitioners willing to learn, and eventually master, blockchain technology.

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3. Accounting will become real time.

Just like doctors are increasingly able to monitor the health of patients in real time thanks to advances in technology, blockchain
technology will help enable accountants to monitor financial performance in real time. Due to the fact that blockchain technology is
based on, and leverages, an internet-based and decentralized platform, it will be simpler than before to track and monitor the inflows
and outflows from a business. Building on the increasing utilization of cloud computing technology by both accounting organizations
and client firms, this facet of blockchain represents a logical step in this same direction. Leveraging these advances in technology, and
the ability for both business owners and accountants to keep abreast of changes in the business will only help accountants elevate their
position to that of trusted business advisor.

Blockchain technology is already disrupting the accounting profession, and will continue to do so moving forward, but it will deliver both
opportunities and challenges. Understanding the implications and possibilities of this technology on the profession is essential for
practitioners seeking to keep up to date and relevant in a rapidly changing marketplace. Technology tools can provide opportunities,
and CPAs have both the mindset and opportunities to take advantage of them.

Sean Stein Smith

Sean Stein Smith, DBA, CPA, CMA, CGMA, is an assistant professor at Lehman College, part of the City University of New York, and a
columnist for Inc.com.

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Accountants need to plan their technology transformation

By Daniel Hood
Published November 13 2017, 921am EST

More in Technology, Mobile technology, Cloud computing, Practice management, Blockchain, Thomson Reuters

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There are three types of accounting firms, according to Thomson Reuters Jon Baron, and roughly a third of them are dooming
themselves to extinction by not embracing change and technological transformation.

In a keynote address to the 1,700 attendees of the companys annual user conference, Synergy 2017, the managing director of the
professional segment for Thomson Reuters Tax & Accounting business broke the profession down into three segments: Roughly 30 to 35
percent of firms dont want to change, and theyll probably disappear. Then theres the 60 to 65 percent that use technology to enhance
existing practices, but not much more. And the restless than 10 percentare aggressively transforming their firms and diving into
technology, and they will thrive.

Citing a host of statistics to demonstrate the enormous growth in Internet usage and the penetration of the technology into every
minute of everyday life, Baron said, We have all changed because of these technology changes. We have to understand how it affects
us in our firms.

One key is how technological change will affect firms' ongoing viability as businesses: Growth in progressive firms continues to
strengthen, Baron said. The technology laggards arent growing at all, or are simply disappearing.

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Some firms are sitting on the sidelinesI think thats a mistake, he continued, sharing the results of a survey of users ofLogin
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Reuters UltraTax tax prep software that found that 37 percent of them dont have a website, 34 percent dont use document

management software, 61 percent dont use portals, and 86 percent said that they dont use the cloud applications.

Were transforming as a profession just to stay in the game, he said. We need to plan that transformation.

Opportunity in chaos

While many accountants are worried about studies like one done by McKinsey that found 86 percent of accounting tasks can be
automated with current technology, Baron pointed out that study also noted that knowledge work of the sort accountants are
particularly apt at has a low potential for automation.

Even when machines do take over an activity, that doesnt mean that jobs dont remain in those areas. In fact, sometimes they grow,
Baron said. And new methods of doing traditional accounting work can bring us explosive growth.

As an example, he noted the vast amounts of data being thrown off by emerging technologies: The size of the data universe will double
every two years, with fifty-fold growth from 2010-2020, he said. Were going to get into unstructured data in the accounting profession
were going to see fast data that is immediately available and actionable that accountants can supply clients. Were a data-driven
world, and the profession is in a great position for that. We understand data and analysis.

Similarly, he highlighted the enormous potential for change represented by blockchain, a technology that Thomson Reuters is deeply
engaged with. Dont think of blockchain as bitcoinits much, much more than that, he said

Jon Baron addressing the 2017 Thomson Reuters user conference

Thomson Reuters

For instance, creating pools of instantly verifiable data can transform assurance functions. We may not need audits if we can access
automatically validated information, Baron said. The Big Four firms are hiring fewer accounting gradswe wont need these armies of
auditors.

They will, however, need data analysts, technologists and others who can leverage these technologies to provide valuable advisory
services to clients.

Two big reasons

Clients are another important reason accountants need to lean in to technology, according to Baron, as they have already embraced
the cloud, mobile and social mediathe types of technologies firms are all too often behind on.
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Clients are consumers, he warned. They dont like paper. They want interaction on their terms, not yours. And they mayLogin
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visit with you in person.

If that isnt reason enough to start planning a firms technology transformation, Baron pointed out that being up to date can be a
recruiting and retention toolno small bonus at a time when large firms report turnover of 23 or 24 percent, and even smaller firms are
seeing rates of 10 percent and higher.

What are we doing to keep people? he asked. What are we doing that excites them? Are we offering them the latest technologies?
What are we doing about training and development, and not doing things the same way? If they see a firm thats stagnating, that turns
them off.

Coming soon

As part of his keynote, Baron also discussed some of Thomson Reuters upcoming plans and introduced a new product.

To start, he highlighted the success of the companys online platform for accountants and tax pros, Onvio, which now includes Onvio
Trial Balance and Onvio Project Manager, along with Onvio Documents, Onvio Client Center and Onvio Time & Billing. And he
announced that the company plans to release Onvio Tax and Onvio Fixed Assets next.

Next he introduced OnBalance, a cloud-based app built on the Onvio platform that is aimed at helping business owners better manage
their businesses, while also working more closely with their accountants.

OnBalance integrates with both Onvio and the Thomson Reuters CS Professional Suite. There are a lot of overlapping functions
between accountants and business owners, and OnBalance is designed to work in that area, Baron explained. He noted that it includes
collaboration tools to help accountants reinforce and expand their role as their clients most trusted advisor in the face of massive
changes.

Reliable, accurate after-the-fact services are no longer enough. This transformation is happening, he warned. Will we be relevant
down the road?

Daniel Hood
Daniel Hood is editor-in-chief of Accounting Today and Tax Pro Today, and has covered the tax and accounting field for over 20 years.

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Posted By mjmcpa
Monday, November 13 2017 at 445 PM

The one question that I have asked that nobody answers is: Great, now we have technology doing all these jobs that used to require people. So what pray
tell are people going to do? How are we not going to have an economic collapse if 30% of all jobs are replaced by technology? Our economy is already
teetering on the brink of a collapse and is totally debt financed, so what happens when people lose their jobs and can't service their debts?

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