Change comes slowly to the CPA profession. After all, the point of accounting is to keep track of money, and that is a process that demands constancy.
Blockchain, though, offers the promise of both streamlined accounting and complicated changes. The accounting profession is rallying collaborations such as the Wall Street Blockchain Alliance and efforts by the Association of International Certified Professional Accountants to develop guidance for CPA firms and their clients.
It will take a while for those standards to emerge, but businesses can use the wait to sketch out how they might plan for a shift to blockchain. Proactive enterprises are already widening their radar screens to include blockchain in their view, says Andries Verschelden, a Menlo Park-based partner with Armanino LLP, a CPA firm with a large technology practice that is rapidly expanding its cryptocurrency and blockchain work.
To be sure, blockchain is at such an early stage that it isn’t affecting many organizations’ audit cycles. “It doesn’t really scale, yet,” says Verschelden. “It’s slow.” Current financial technology handles transactions quickly and securely (for the most part), so blockchain doesn’t offer compelling advantages.
But that makes the timing right to let the developers work through their projects. Blockchain capabilities will improve, and that’s why accounting and blockchain observers say that now is the time to have big-picture discussions with your CPA firm.
“The short-term view is that we’re helping our clients prepare for an explosive moment, similar to how cloud software emerged and how that created a new platform of SaaS companies,” Verschelden says, referring to software as a service. “The long-term play is that it affects non-technology clients as well, from nonprofits to governmental agencies to food and beverage companies. Our job is how to be sure that clients can benefit from this development, from payroll to ERP solutions to equity management and compensation.”
Verschelden adds that “it’s too early to tell how this technology will replace Quickbooks or NetSuite, or tax preparation or audit software.”
“We think that it will at some point, because often these things become more impactful as they grow and more smart people work on it,” he says. “This seems like a technology that will have that kind of momentum.”
Querying Your Accounting Firm
Verschelden says that there are key questions to explore with your CPA firm:
- How are they staffing up for blockchain? Do they intend to grow their own talent or acquire startups or convert hotshot consultants to in-house technical experts?
- Do they anticipate developing a specific blockchain and cryptocurrency practice that you will have to engage separately from ongoing tax and audit functions, or can you expect most of the firm’s accountants to be conversant in blockchain and how it affects your operation?
- Is the firm developing alliances with consultants and specialty accounting firms that add up to the expertise you might need?
- How should you be planning and budgeting for training, system conversion, and accessing expanded software capabilities as you integrate existing financial controls with blockchain-based functions?
Rippling Through Audit
Monika Miles, president of Miles Consulting Group of San Jose, a boutique CPA firm, predicts that large firms, including regionals, will develop blockchain specialty groups. She says those internal consultants will probably be pulled into industry-specific assignments, if the precedent set by artificial-intelligence expertise holds.
“Eventually, this will ripple through audit, so you’ll need to keep that in mind for training,” she says. “Finance officers will need to be educated on this. You don’t want anyone in the finance department to say, ‘Blockchain? What’s that?’”
Verschelden adds that the most fundamental preparation is to expect to change and to dismantle internal barriers to swift, decisive adoption of the industry standard when it’s clear what that will be.
The transparency and “attached accountability” of blockchain could upend some longtime staffers’ understanding of the value they bring and the control they have over various financial controls and practices.
“If we can get transactions all to a single environment, it will be a whole lot more efficient,” says Verschelden, “We’re trying to answer [client questions] as quickly as we can, but it’s moving so fast that we’re learning on the job, because it’s new for everyone.”
Disclosure: Armanino participates in an industry benchmarking project sponsored by the Accounting and Financial Women’s Alliance, which is managed by the author. The author owns no cryptocurrencies.