Impact of Block-chain Technology on Accounting and Finance

Abstract

Blockchain technology involves the usage of transparent and publicly accessible ledger. Ituses encryption while transferring the data. It also uses proof of work methods. In this, several blocks of data are tied with each other. This technology can enhance the efficiency of accounting and finance functions due to reduced paperwork, effective audit trail maintenance, superior process visibility and automation of transactions. Due to blockchain technology, many opportunities emerge in the field of accounting and finance such as clarity over title of assets and ascertainment of liabilities, efficiency of accounting and finance due to reduced cost and time in maintenance and reconciliation of accounts, providing better information security and privacy, Smart contracts etc. Blockchain technology poses certain challenges such as operational inefficiencies caused due to users lack of knowledge and understanding, perceived lack of control due to decentralized network, lack of effective networking due to the different block-chains developed by different sectors, un-affordability due to the running cost of validating and transaction sharing, impact of national regulations on the usage of block-chainetc.The recommendations of the Indian Finance Ministry for establishmentof a group of ministers to check the usage of technology in government processes, coordination of the ministries for implementation of blockchain solutions in trade finance and conducting training programs on fin-tech etc. pave way for its effective application on the field of accounting and finance in the years to come.