It's an exciting and challenging time for today's accounting educators. They not only teach traditional subjects, but also must keep pace with ever-changing technology to help prepare students for their careers.
One of the most significant emerging technologies to be added to the mix is blockchain, defined by Cory Ng, CPA, CGMA, DBA, an assistant professor and the undergraduate program coordinator in the Department of Accounting at Philadelphia's Temple University, as "a sophisticated accounting system that keeps track of digital or physical assets in a distributed ledger."
Blockchains are essentially shared databases that allow multiple computers (known as nodes) in a network to view and confirm (or reject) transactions. The data is stored in blocks that are linked to one another via a method called cryptographic hashing. This method, when combined with the distributed, decentralized nature of the blockchain ledger, makes each block of data virtually impossible to alter after it has been added to the chain.
Blockchain was created to facilitate bitcoin transactions, but the applications for the technology extend far beyond cryptocurrencies. It is already being used to track transactions in a number of areas, among them supply chains and real estate.
Blockchain is becoming widely used at big accounting firms, including at the Big Four level. "Some of the immediate use cases are in the financial services sector, where companies are looking at blockchain to revolutionize the payment and reconciliation processes, but blockchain has potential applications across all industries," said San Francisco-based Michael Marzelli, senior manager and co-leader of the U.S. Audit & Assurance Services Blockchain Practice at Deloitte & Touche LLP. Deloitte is working with blockchain from all angles, he said: use case ideation and blockchain building and operating, but also from both a tax and an audit perspective, particularly because blockchain encompasses both enterprise applications and cryptocurrencies. Deloitte serves blockchain and crypto business models across numerous industries, including financial services, health care, and government, Marzelli noted.
How much should students know about blockchain?
Today, blockchain is increasingly entering the college classroom — at the undergraduate and the graduate level — and accounting, business, and information systems (IS) professors are either dipping their toes into the blockchain waters or diving in headfirst. Faculty may find themselves asking how much students need to know about blockchain, and how can they best prepare students — and themselves — to learn about it.
Some faculty have strong opinions on the matter. "All students need to learn blockchain," said Mary Lacity, Ph.D., an IS professor and director of the Blockchain Center of Excellence (established in 2018) at the University of Arkansas. "Let's go back 20 years; it's like asking, 'Who needs to understand the internet?' Eventually this will be the platform on which all companies transact."
Associate professor of accounting Myles Stern, Ph.D., who teaches a dedicated blockchain course at Wayne State University in Detroit, has a similar perspective: "Blockchain has been proposed as a solution for so many different purposes that we have to get ready for what may come our way.”
How to start teaching blockchain
Faculty new to blockchain may be unsure how to get started. Here's some advice:
Seek out help. Tap the expertise of Anders Brownworth, a cryptocurrency specialist and former blockchain lecturer at MIT. Brownworth's website “demonstrates visually how a blockchain works," Ng said.
Ng also recommended taking online blockchain courses from providers like Coursera, Edureka, and Udemy, or contacting the EY Academic Resource Center, which provides blockchain videos and slide decks to faculty free of charge.
Or, ask blockchain-experienced faculty for help or advice, if necessary. "I'm certainly willing to let other faculty members across the country use the material I've developed for my course," said Stern.
The AICPA offers a certificate program, a CPE course, and a digital skills badge in blockchain.
Start a blockchain course. Propose that your school or department start a blockchain course if it doesn’t have one yet. Stern taught his school's first graduate blockchain course in the fall of 2018. Since then, that course has been full, and usually half the students in it are accounting majors, he estimated.
Bring blockchain into your existing classes. Weave blockchain into current classes if it fits. For example, "examining the impact of blockchain on the audit profession would fit well in an auditing class,” Ng said, “since blockchains have the ability to provide an immutable audit trail." In a federal taxation class, you could explore the effect of blockchain on transfer pricing, he said. Marzelli suggested bringing in guest lecturers like himself to talk about what they are doing in the blockchain space.
Teach the basics. Blockchain is still in its infancy, so students don't need to know the high-level, technical details of the technology, but they should have a basic understanding of how it operates, how it can help in certain transactions, and the risks it involves.
Because many students have heard about bitcoin, Stern recommends first explaining to students how bitcoin works, even though cryptocurrencies are only part of the blockchain puzzle.
He offers the following benchmark for how much blockchain students should know. "One of my learning objectives for the course is that I want each of the students to know enough about blockchain so they can look at a proposed blockchain use case and evaluate if it is really an appropriate solution," Stern said.
Make it real. Students can learn by doing, and particularly by figuring out if blockchain can help or hurt a real-world business transaction. For instance, you could have students work through a case study where they assess the risk associated with a particular use of blockchain, Marzelli said.
Ellen Terry, CPA, a professor of practice at the University of Houston, agrees with Marzelli, noting that it will sink in more with students if instructors can create a blockchain instance, and walk students through transactions in a business process.
Students need to understand two key issues, Terry said: the analysis of blockchain transactions, and the management of blockchain processes, which presents unique risk management challenges.
"Since blockchain is really just another platform that feeds transactions into ERP (enterprise resource planning) and related applications, analysis won't change much," she said. "It's the processes and controls that will change most, and students — especially those who want to work in audit — should understand the unique risks of blockchain, such as access and permissions” as well as the “protection of keys and cryptocurrency."
Discuss content on blockchain. Assign blockchain-related articles or videos for students to explore, and then talk about them in class, Ng suggested. In his classes, students "typically review and discuss blockchain videos and articles published in professional journals, either in class or through online discussion boards," he said. A possible topic to study, he added, would be "how blockchain solved the double-spending problem with digital currency," since this subject would be well suited for a class studying double-entry accounting.
Establish research projects. Assign research projects on blockchain, so students can delve into the topic. For example, he noted, students could write papers and give presentations on how blockchain is used in auditing and tax practices, and they can offer ideas as to how other areas of accounting might benefit from the use of the technology.
"A research project on blockchain in an accounting information systems course would allow students to explore an organization's entire information system," Ng said. "Students who understand blockchain technology and its applications to business will be able to add value to their organizations."
Cheryl Meyer is a California-based freelance writer. To comment on this article or to suggest an idea for another article, contact senior editor Courtney Vien at Courtney.Vien@aicpa-cima.com.