The emergence of blockchain technology has led to a concern in the CPA profession that is perfectly understandable.

Technological advances can threaten people’s livelihoods in any number of professions. The development of the internet had a devastating effect on newspaper journalists, and some experts say self-driving vehicles may cause huge job losses among truck drivers.

Blockchain, meanwhile, has implications for the accounting profession. Blockchain is a digital ledger on which transactions are recorded chronologically and can be viewed by all who have access. The technology is expected to affect auditing, cybersecurity, and financial planning and analysis.

Erik Asgeirsson, president and CEO of CPA.com, the technology arm of the AICPA, said that some CPAs have anxiety that blockchain might put audit professionals out of business. But while blockchain is likely to change the way CPAs work, he said, he is telling accounting firm leaders that the accounting profession can continue to thrive through the use of blockchain technology.

“It’s going to be a fantastic, secure database that will have uses,” he said during a panel presentation Tuesday at the Wall Street Blockchain Alliance’s Blockchain for Wall Street education day in New York City. “But it’s not going to put them out of work.”

Large and medium-size CPA firms already are seeing the implications of blockchain for their clients, Amy Pawlicki, CPA, vice president–Assurance & Advisory Innovation for the Association of International Certified Professional Accountants, said during the panel session. Companies are implementing blockchain into their enterprise resource planning (ERP) systems, particularly for tasks such as procurement and supplier management.

Blockchain’s ledger-based technology can simplify the procurement process because it enables secure recording of transactions in a way that can lead to unprecedented transparency and increased operational efficiency.

“Our auditors are already auditing transactions in the blockchain,” Pawlicki said.

Blockchain’s transparency gives visibility to all transactions for approved users, and this may decrease auditors’ work with sampling and validating transactions. But this allows auditors more time to focus on controls and investigating anomalies. Meanwhile, opportunities are emerging for CPAs to use blockchain technology as they expand their assurance services to areas such as cybersecurity and sustainability.

“We’ve got a lot of work to do … it’s a great opportunity in an area where CPAs can add a lot of value,” Pawlicki said.

An important next step for the profession in the use of blockchain is accommodations for the technology from standard setters and regulators. SEC Chief Accountant Wesley Bricker, CPA, J.D, said Tuesday that the commission’s Office of the Chief Accountant is investing time in understanding blockchain technologies, and suggested that accounting professionals do the same.

“It is important that those in the accounting profession invest the time to understand new trends and developments in technology and commerce to identify their potential effects on financial reporting to investors,” Bricker said during a speech at a Financial Executives International conference in New York City.

Past developments such as the emergence of computers, ERP systems, and cloud computing have merely changed CPAs’ work instead of making them irrelevant. The same can be true with blockchain, Asgeirsson said.

“Through every phase,” Asgeirsson said, “what’s really happened is that the accountant’s and the auditor’s role has just evolved.”

As cybercriminals train their sights on sources of high-value data, accounting firms need to boost their cybersecurity efforts.

The American Institute of CPAs (AICPA) and Wall Street Blockchain Alliance (WSBA), a nonprofit trade association promoting the comprehensive adoption of blockchain technology across global markets, have announced plans to work together to define the impact of blockchain technology for the accounting profession and advance the interests of both the public and profession in this area.

As part of this collaboration, the AICPA – through its technology arm, CPA.com – will administer the WSBA’s working group on tax and accounting, a focal point for advocacy and education on blockchain adoption within the profession. Other existing WSBA working groups include research and innovation, legal, and technology and product. The working group model is designed to provide a forum for experts to share information, guide advocacy and technical efforts and create broader educational opportunities—such as webcasts, roundtables and other content—to address issues arising from the adoption of blockchain, distributed ledgers and smart contract technologies. 

“The accounting profession is built on confirmation and verification, and that’s what blockchain is all about,” said AICPA President and CEO Barry C. Melancon, CPA, CGMA. “This technology can have a profound impact on accounting and finance going forward, and it’s important we make sure that its adoption proceeds in a way that’s in the best interest of the public and our financial markets. Our working relationship with the WSBA, combined with our expanded global reach through the Association of International Certified Professional Accountants, will help further that goal.”

The collaboration was announced at the fall meeting of the AICPA’s governing Council in San Antonio, Tex.

“The WSBA is very pleased to be collaborating with the AICPA and CPA.com to guide the evolution of the global accounting profession in a future with blockchain technology,” said Ron Quaranta, chairman of the WSBA. “We look forward to working together to advance the world of accountancy and its use of blockchain, as accountants become integral participants in the adoption of this innovative technology for global markets.”

As a first step in collaboration, the AICPA will be part of an accounting-related panel at the WSBA’s Blockchain for Wall Street education day on Nov. 14, 2017.

“Blockchain is one of several innovations that are reshaping the accounting profession,” said Erik Asgeirsson, president and CEO of CPA.com, one of the participants in the upcoming panel. “Our role with the WSBA working group is to guide and speed the use of blockchain technology as it applies to the core areas of an accounting practice.”

Most accounting and business advisory professionals know that industry-leading firms rely heavily on technology to grow their businesses. But where does a firm start in evaluating technology?

Experts suggest that firms cannot select new technology effectively without first examining their clients, their services and their staff as they all relate to firm strategy. Greg LaFollette, strategic advisor to CPA.com, says starting with the question “What technology should I use?” is like saying, “I want to build a house; which hammer should I buy?” Technology, like a hammer, is really a tool to help firms build a dream practice. The process of completing the detailed “blueprints” or strategy for the firm will clarify what technology tools are required. Some technology solutions address multiple challenges, but it is still important to consider how specific solutions may address other critical challenges facing the firm.

The most common challenges that can be best solved with technology fall roughly into three broad categories:

1. Providing services and products

When it comes to providing services and products, challenges center on efficiency, staff utilization and differentiation from competitors. Thus, experts recommend technology that incorporates automation, artificial intelligence and business analytics as the types of solutions that accounting and advisory professionals should explore. Automation allows more routine tasks to be handed off to administrative staff, while senior accounting staff can focus their efforts on providing additional analysis and insight. Business analytics technology, which leverages artificial intelligence, can also make it easier and faster for accountants to provide operational or strategic advice to business clients.

2. Customer relationship management

Technology can help accounting and advisory firms manage the entire life of a customer relationship — from finding the prospect (or better yet, making it easy for the prospect to find the firm), to coordinating client communications and deepening the relationship to expand revenue opportunities and ensure retention. Several experts list a customer relationship management system as the type of technology that can address many of the challenges of accounting and advisory firms, particularly when some form of CRM is implemented early on in the life of the firm.

For a startup firm, a cloud-based CRM solution should be one of the first technology solutions incorporated, according to Doug Sleeter, an Accounting Hall of Fame member and accounting software guru focused on small business solutions. “For accountants, that term might not feel as comfortable today as it will in the future for them, because it’s not your client list only, it’s your marketing list, your database of details about your clients, maybe even into the tax return records,” Sleeter says. CRMs can consolidate information about email traffic, action items for the firm, etc., all in one spot. Technology thought leader and consultant Brian Tankersley notes that firms need more activity tracking and centralized correspondence in order to provide continuity of service as the team and client base grow.

3. Performance/practice management

Another category of challenges that firms can solve with technology is practice and performance management. Examining a firm’s strategy and processes up front will be crucial to selecting the technology that is most needed. Indeed, those examinations will often highlight bottlenecks or roadblocks to customer service, growth and staff engagement. Solutions to manage the practice and workflow can be as simple as e-learning and web meeting technologies.

Other workflow-focused solutions can address challenges related to balancing staff workloads and digital document storage. Experts say it’s critical to have secure, cloud-based storage that allows clients to transfer data and push documents to the firm so that the firm can access them immediately. These solutions also allow staff in multiple locations to access what they need to in order to perform their work and move the engagement forward. Cloud-based storage also allows firms to share deliverables with clients electronically and immediately. This helps a firm focus on what’s most important (even if it’s not the same as what’s most urgent) about managing the practice.

New technology opens up opportunities for accountants and business advisors to stay on the cutting edge of client services and scale their firms efficiently. By taking a closer look at these three challenge areas and solutions, firms can gain a better understanding of what technology will best meet their needs.

Excerpted with permission from Tech Roadmap: Selecting the Ideal Solutions to Thrive in Business Advising.