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Video transcript:
So one way that blockchain will change the accounting industry is with the concept of triple-entry accounting. For years, we’ve had double entry where you had credits and debits, and you had to audit those transactions. With triple-entry accounting, you still have the debits and credits, but the technology verifies real time, verifies those transactions, and adds them to a blockchain.
So basically just the concept of triple-entry accounting; it will allow the auditors access to a large amount of the data or the transactional data that’s required to perform the audit, and they can actually focus on deeper things such as the internal controls around the audit.
There’s been a lot of conversations recently around continuous auditing, so instead of having a year or at end-of-the-year [audit] and you look back, you are able to prepare this information for your client on a more regular basis. So having these transactions that are already verified because they are on the chain, the blockchain, that will help promote continuous auditing.
For the audit—so they come, and they look at the books, and they look at the transactions of a company for the past year, and then they prepare the financial statements that say this is how you did last year. Well, now with continuous auditing you don’t have to look at just the last year; you can look at the last month or the last quarter.
One of the other characteristics of a blockchain is that it’s distributed. So every node, or every computer that’s on the network, has a copy of the ledger of the blockchain. So if one goes offline, the others are still there, so it is very resilient. Same with other blockchains. So if it is a different transactional blockchain, it again it’s very resilient because you have multiple copies out there.
