Impact of blockchain technologies on the accounting profession in Australia
Creators: name: BAKSHI, Sukanta
Publisher: name: RMIT University
Year: 2024
Subjects: classificationCode: 350199
subject: Accounting, auditing and accountability not elsewhere classified
classificationCode: 441005
subject: Social theory
classificationCode: 461399
subject: Theory of computation not elsewhere classified
classificationCode: 470299
subject: Cultural studies not elsewhere classified

description: In the discourse of current external literature and media communication, much is being made about the impact of blockchain technologies (BCT) on the auditing profession.

The recent development of BCT and digital assets has the potential to radically change how the auditing profession is performed and may trigger a revolution in auditing (Dai &amp; Vasarhelyi, 2017; O'Leary, 2017; Ruta, Scioscia, Ieva, Capurso, &amp; Di Sciascio, 2017; van Rossum, 2017; Z. Zheng, Xie, Dai, Chen, &amp; Wang, 2017). Previous studies have not examined the impact of BCT on the auditing profession in depth, and none within the Australian context. This research investigated the social and professional context within which BCT emerged, contested, tested and formed the opinion of Australian auditors. By leveraging multi-grounded theory, this study developed a conceptual framework that models the possible transformation of work practices within the Australian auditing profession due to BCT deployment. 

This study was based on thirty interviews and also the analysis of official reports, social media, blogs, websites, and observation of the phenomena by actively participating blockchain industry events. The interviews and YouTube videos were transcribed and analysed by leveraging Nvivo. The data analysis process was influenced by Corbin and Strauss (1990) and further influenced by Multi-grounded theory devised by Goldkuhl and Cronholm (2010). The study extensively covered the opinion of the technology consultants, experienced auditors from the Big 4, premier mid-size, medium size and small audit firms, blockchain engineers, entrepreneurs, economist specialised in crypto economy, members of the Blockchain association of Australia and members of Australian Accounting Standards Board (AASB). 

This exploratory investigation of blockchain in the auditing profession is one of the first empirical studies on the current state of the application, adoption and acceptance of blockchain and crypto asset in the external auditing space. 

Blockchain technology was described by the auditing profession as disruptive because BCT may potentially disintermediate auditors by offering an alternative digital trust system to industry by leveraging anonymity, immutability, decentralised, distributed, real time, transparent, self-auditing public ledger, smart contracts and continuous auditing. Auditors, however, also depicted the technology as immature, non-standardised, expensive for deployment with potentially enormous risk due to governance and security issues. Therefore, both optimistic and pessimistic views emerged. Based on primary and secondary data analysis, the five main findings suggest that,

1. The benefits of blockchain have not yet appeared in the Australian auditing profession since the uptake of technology is minimal in Australian industry. Both barriers and enablers of BCT adoption in Australian auditing profession have been identified.

2. The attitude of auditors towards BCT is mostly sceptical and cautious. 

3. The existing challenge to the accounting profession is to apply audit assertions to blockchain. Auditors will need to find new ways to develop audits of intangible assets such as cryptocurrencies and tokens. 

4. Smaller auditing firms are not tooling up for blockchain-based auditing and have limited knowledge. Most of the medium size audit firms have taken a wait and watch strategy. Premier mid-size audit firms are venturing into crypto and token-based auditing by collaborating with Blockchain service providers. The Big 4 Audit firms in Australia appear to be in the R&amp;D and consulting space.

5. In the future BCT might have profound impact in the auditing profession (audit activity, audit institution, structure, strategy, identity) but only if the technology fulfils the promise and is adopted in future by the Australian society at large.

These findings have been captured through a comprehensive model that developed from the data, the "Translation model of BCT in the Australian auditing profession". The model consists of four primary categories: External environment, Audit field level, Organizational level and Future Impact. 

External environment includes: Emergence of Blockchain, Disruptive components of BCTs, Networking and implementation drive and who was involved. Adoption and Implementation factors include technical, institutional, cultural, economic and other factors, as well as unintended consequences. Audit field level includes: Disruptive applications of blockchain technologies in auditing, Functional pressures, Auditing and cultural norms (technical, institutional and cultural). 

Organizational level includes: Risk perception towards blockchain and crypto (inherent risk, control risk and detection risk), Attitude towards BCT, Strategic responses of each class of audit form and responses from professional accounting associations. Finally, the model was extended with the future impact of BCT on the auditing profession. If BCT is adopted by Australian industries, there may be an impact on audit activity, audit structure, strategy and identity.