The theme of accounting in blockchain environment has been referenced and theoretically discussed over the last few years in international publications, both of academic and professional nature. However, until today, there are no other known works that pursued a path in order to perform accounting records in blockchain. In the present work the authors go beyond this, as they will demonstrate, also proposing a practical solution for its implementation and use in a generalized way. The authors present two new proofs of concept, which are part of an ongoing work process to obtain the development of the Portuguese accounting system using blockchain. The most recent of the sequential steps was designing and developing the tokenization process and a Dapp that will be used to perform and consult accounting operations through any mobile device, by developing smart contracts. In a near future, this system will allow accounting operations to be carried out, in a simple way, on the blockchain, assuming implications for the way in which accountants, users of financial information, and software houses work.
TopIntroduction
The attention that has been devoted to the topic of accounting in a Blockchain environment is clearly evident in the international scientific literature. Among the various authors, who over the past few years, have dedicated themselves to the issue, we highlight, in academic publications, Kitsantas & Chytis (2022), Pascual-Pedreño et al. (2021), Arslanian & Fischer, (2019), Bonsón & Bednárová (2019), Islam et al. (2019), Dai & Vasarhelyi (2017), Grigg (2005); as well as in professional-oriented content Primavera (2022), FIPECAFI (2019), Thomson Reuters (2019), Deloitte (2016), PricewaterhouseCoopers (2016). In all these works, the potential of the Blockchain environment for the development of accounting solutions is obvious.
Most of the professional works that we identified in the previous paragraph, addresses, conceptually, to general issues such as reducing business costs, increasing the speed of transaction settlement, reducing the risk of fraud, improving the transaction audit function, and increasing the effectiveness of monitoring. Specifically, on the accounting issue, works refers to the possibility of improving next generation business processes to structurally change shared practices between customers, competitors, and suppliers (PricewaterhouseCoopers, 2016). The consultancy firm Deloitte (2016) assumes expectations that Blockchain will improve collaboration between companies and individuals, transparency of business processes and data, as well as productivity and sustainability of the economy.
All the previous referred works considered, generally, regards that the functions inherent in the Blockchain system, such as the protection of data integrity, the immediate sharing of necessary information, as well as programmable and automatic process controls, could facilitate the development of a new accounting ecosystem (Kitsantas & Chytis, 2022; Pascual-Pedreño et al., 2021; Arslanian & Fischer, 2019; Bonsón & Bednárová, 2019; Islam et al, 2019; Dai & Vasarhelyi, 2017; Grigg, 2005; Primavera, 2022; FIPECAFI 2019; Thomson Reuters 2019; Deloitte 2016; PricewaterhouseCoopers, 2016). In theory they state that this technology could also serve as the basis for enabling automated assurance and help the current audit paradigm become more agile and accurate.
However, all the potential benefits and challenges that Blockchain could bring to the accounting and auditing domains are still under-explored (Dai & Vasarhelyi, 2017). We would add that since there are no accounting solutions developed on blockchain yet known, it is difficult to predict the effects of accounting in a Blockchain environment, since these effects can only emerge departing from its practical use. Still, reinforcing our just mentioned interpretation, in the professional world (Primavera, 2022), is clearly mentioned and highlighted the need for a Proof of Concept (PoC) to emerge as soon as possible.
This chapter corresponds to a project that aims to fill this gap, by presenting two PoC, generating knowledge for both practitioners and Professional Associations, as well as for regulators in the accounting field, for software houses and also for the users of financial information, in a global way. Our project consists of developing the Portuguese Accounting System in a Blockchain environment. After this, accounting in Blockchain can be and, most surely, will be, developed for any accounting system anywhere in the world.