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ACCT6007 Financial Accounting Theory and Practice Report

Context:

This assignment develops research and critical thinking abilities. It is a critical analysis/ review of an academic article. Changes in technology are impacting accounting and how accountants perform their jobs. This activity will provide students information on new trends in accounting field.

Instructions:

Download and critically analyse an academic article written by Jun Dai and Miklos. A. Vasarhelyi. This article can be found in the Torrens University library using the following citation:

Dai, J. & Vasarhelyi, M.A. (2017 Toward Block chain-Based Accounting and Assurance. Journal of Information Systems Vol. 31 No. 3, p5-21,
https://torrens.idm.oclc.org/login?url=http://search.ebscohost.com/login.aspx?direct=true&db=bsu&AN=126177472&site=ehost-live

You may use an essay format or any other acceptable academic format for critical review. Use APA 7 referencing style guide. Use minimum 10 academic references.

Answer the following questions during your analysis.

1. Discuss the three phases of blockchain technology? What is the potential use of blockchain technology in accounting?

2. The author discusses Triple Entry Accounting. What is your understanding of the concept?

3. Do you agree or disagree with any arguments made by the author? Explain your point of view and provide evidence in support of your point of views from other academic resources.

4. Critically review any potential issues or problems with blockchain technology being used in accounting.
To answer all the above questions: Review the article provided and search for related academic journal articles. Use minimum 10 academic references.

Solution

Introduction

In this paper, an article related to the Blockchain technology and the utilization of it in accounting is going to be analyzed critically. “Toward Blockchain-Based Accounting and Assurance” is the article that is going to be analysed here.

Three phases of blockchain technology

By considering the information shared in the article, it can be stated that since 2009, blockchain is getting evolved through three phases and these three phases are blockchain 1.0, blockchain 2.0, and blockchain 3.0. At the initial stage, the technology has been designed by considering it as a complementary technology to Bitcoin (Nebreda et al., 2021). By considering the viewpoint of Dai &Vasarhelyi(2017), it can be stated that the focus of blockchain 1.0 was on crypto-currency. For Assignment Help, In the case of Blockchain 2.0, it has been found that the similar trading is involved. However, the matter is that blockchain 2.0 has broader scope with respect to financial applications. The applications related to blockchain 2.0 include derivatives, digital asset ownership and others. However, the matter is that blockchain 3.0 has been able to expand the system further. It supports the system to work in other areas beyond business and financial applications. Blockchain 3.0 is found having the features to be used in voting systems, and government’s administrative works.

Potential Use of Blockchain Technology in Accounting

In the article, the utilization of the technology in the field of accounting has been elaborated. It is a fact that blockchain technology is gaining an attention (Noferet al.,2017). The authors have stated that the accounting profession can get a number of benefits with the utilization of this technology, and it has also been stated in the article that the technology is changing the working processes of accountants. The technology is helping accountants to keep accounts-related data securely, and it can be regarded as the most effective utilization of the technology in the field of accounting. Apart from that, with the utilization of the technology, companies are getting the ability to generate new accounting information system that can record validated transaction on secure ledgers. These transactions include monetary exchanges and accounting data flow within an organisation.

Triple Entry Accounting

It is a fact that technology is being changed in the world in an unprecedented manner (McKee et al., 2020). In the article, a significant discussion regarding triple-entry accounting has been made, and it has been stated that the triple-entry accounting is being used in these years in a significant manner as a secure and independent paradigm. As per the viewpoint of the authors, it can be stated that the triple-entry accounting system can bring an improvement to the reliability of the financial statement of an organization. The system requires transition authorization from a neutral with each party. It makes the transaction process secure, and that is why the utilization rate of the system is being increased. Apart from that, it creates a record for transaction so that adequate transparency can be maintained in regard to the overall transaction process.

Discussion Regarding The Arguments Made by The Author and Personal Viewpoint

Casado-Vara&Corchado(2019) have stated that in the last few years, blockchain has become one of the most frequently used words among scientists. The author has made a significant discussion regarding the utilization of the technology in the area of accounting and the viewpoint of the authors of this article is found has a similarity with the viewpoint of Casado-Vara&Corchado. The authors have stated that the technology is bringing a number of changes to the way accountants are working, and I am completely agreed to this statement.In this regard, I want to consider the viewpoint of Qasim&Kharbat (2020), who have also stated that the introduction to BT as a database is changing the landscape of accounting. It means that the statement of the authors is justified, and that is the main reason I have been agreed to them.

In accordance to this statement, the authors have provided significant evidence, and some benefits of the technology with respect to the area of accounting have been elaborated. The concerned technology can be regarded as a set of cryptographically linked data blocks (Alkan, 2021). By considering the viewpoint of Dai&Vasarhelyi (2017), it can be stated that the technology can bring an improvement to the area of record keeping in regard to the accounting process. The authors have also stated that the transparency in accounting process is getting enhanced with the utilization of the technology.I think that such statements are completely authentic as I have gone through some literary pieces for more research, and I found a similarity between the viewpoints of Dai&Vasarhelyi and the viewpoints of other authors. For instance, O'Leary(2019) has stated that private blockchain works for an individual organization; it has the ability to control the access to data. It means that it ensures security, and it means that the utilization of the technology is truly beneficial for account-related business areas, and these statements are justifying the statement of Dai&Vasarhelyi.

By considering all of these points, it has been possible for me to understand that the technology is benefiting the accounting system in an effective manner, and this is the argument that has been supported in the chosen article. As I have found adequate evidence for justifying the argument made by the author, I think that there is no need to be disagreed to the argument of these authors.

The paper has been written by using adequate number of references, and it means that credible information has been provided throughout the paper. In this regard, it is also important to state that the authors have written the paper in an understandable manner, and that is why any issue to understand the argument of the authors has not been faced. Along with providing information regarding the benefits of Blockchain, the authors have also highlighted the challenges related to the utilization of the technology in the field of accounting. The authors have considered the viewpoint of other researchers who shown the isuue of technology readiness in the case of EDI or ERP adoption, and by considering the use of blockchain in this field, the authors have developed an argumentative viewpoint that the same challenges can be faced in the case of blockchain adoption, and I found that these arguments are valid. I have gone through a number of websites and articles in order to know about the use of Blockchain and the issues related to the utilization of it. By considering the issues, I have also found that technical readiness is a considerable problem here, and that is why I have been agreed to the argument made by the author.

However, in a particular area, I have not been satisfied with the arguments made by the author. Shao, Zhang & Wang(2021) have discussed security issues in regard to the utilization of blockchain, and they the authors have proposed a model of accounting information security management related to blockchain. However, in this article, the author did not raise any argument regarding security management issue. From personal viewpoint, it can be stated that if the discussion would be made, the literary piece is expected to be more effective.

Potential Issues of Using Blockchain in Accounting

By considering the discussion made by the authors, it can be stated that the utilization of Blockchain can provide a number of benefits to the field of accounting. However, the challenges have also been discussed by the authors. By analyzing the information shared in the article, it can be stated that technological readiness can be regarded as a significant issue in regard to the adoption of blockchain in the area of accounting. Apart from that the authors have highlighted some questions that can come in regard to the utilization of this technology. Stratopoulos (2020) has stated that the adoption of the technology is at an experimental stage. The working principle of multi-entry system and its ability to interface with evolving traditional systems are still not properly know, and it can be regarded as a challenging matter with respect to the utilization of this technology in the concerned field. Apart from that, it is not clear how the actual blockchain model can be adjusted for real-time reporting, and it can also be regarded as a challenge with respect to the utilization of the technology in the area of accounting. These factors can be regarded as potential issues. When blockchain grows, it becomes more vulnerable, and in this regard, scalability becomes a potential issue. However, in the concerned article, discussion regarding scalability has not been made. However, the authors have stated that blockchain requires large computational resources. Otherwise, collusion and corruption-related issues can be faced (Dai &Vasarhelyi, 2017). From this point of view, it can be stated that the authors have highlighted some effective issues of using Blockchain in the concerned field, and the discussion regarding all of these relevant factors has made the article a proper source of information.

Conclusion

In this article, discussion regarding the utilization of blockchain in the field of accounting has been elaborated by considering an article. By analyzing the viewpoints of the authors of this article and by considering the information shared here, it can be stated that the article is informative, credible, and authentic.

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