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Blockchain Technology: the core of digital management of accounting and auditing

Time : 08/03/2022 Author : hr2iqo Click : + -
        Blockchain is connected using cryptography, and each block contains the encrypted hash of the previous block. It is timestamp and encrypted, involving the recording of growing transaction data. This is an open and distributed account book, and the information transactions between the two parties are carried out in the form of permanent storage. Once recorded, the data will be entered into any given block and cannot be changed without changing all subsequent blocks, which requires the majority of all subsequent block networks to agree to the change. Because the data is stored through its peer-to-peer network, its performance has been reduced, and there are certain risks in the centralized storage of data. In digital audit, the distributed account books are sealed in the form of passwords. This technology will gradually enrich the governance system, which will help to strengthen the trust in digital audit.
        With the continuous promotion of blockchain technology in the accounting system, it has certain practical value. Using this technology, it is impossible to forge or destroy entries to hide data transactions and verify them electronically, which increases the security of the system. The processes of many accounting departments can be more optimized, which will improve the efficiency and value of accounting functions. It will reduce some reconciliation and ensure the authenticity and effectiveness of sources, and increase the consulting and other value-added roles of accountants. It acts as a bridge between technicians and stakeholders. The accounting industry has strict rules and regulations and standards, and employees need to master professional knowledge to be competent.
        Blockchain technology provides a classic substitute for professionals, which will be no small challenge. Nowadays, many companies have blockchain projects, but they are in the preliminary research stage. With digitalization, the data stored on the cloud server in encrypted form is the best way to back up data. The framework of audit has become more open, and the technology adopted is called robot process automation (RPA), a technology in which company employees configure computer software or robots to capture and interpret data. It is an existing application for processing transactions and operating data, and can communicate with other digital systems. RPA can be used for accounting settlement, tax function, invoice reconciliation, management report analysis, time and expense process, etc.
        This simplifies the process by reading expense reports and receipts and verifying key fields. Another technology is online audit, which enhances the working process in a simpler way. It includes embedded audit software to facilitate the role of essentially recurring transactions. If unusual places are found, it will issue a red flag as a warning sign to attract the attention of auditors. Now, the highlight will be to check whether these transactions form the correct shape. The same rules do not hinder the company's inspection of internal control and risk reduction. With the adoption of blockchain technology, transaction files (journals, ledgers and trial balance), work notes (called schedules) and all required supporting documents of data will be encrypted and securely stored by auditors and linked to blockchain.
        This helps auditors simplify the audit process. Therefore, auditors will have real-time data access to convert files into audit files together with all supporting documents. This process further digitalizes the corporate governance system, digitally issues shares and uses information technology to manage the trust of shareholders. Through the application of blockchain technology, the integrity of financial reports will be maintained. A perfect governance system will increase the share price, which will drive the share price up, improve the shareholder value, and improve the opportunity to detect any fraudulent activities. The management system of any institution includes the board of directors, managers, shareholders, creditors, auditors, regulators and other stakeholders.
        If blockchain technology is used to issue and trade securities, it will provide more benefits, such as greater transparency and ownership, as well as faster and cheaper trade execution and settlement systems. This will provide investors with more reliable company information. Therefore, these investors may use blockchain to conduct various securities transactions. Advances in trade technology will require professionals with different skill sets to deal with these changes. Another benefit of blockchain can be used in the company's voting system. That is to say, it can simplify the proxy voting procedure and make it conform to the early labor-intensive and fair situation. This will encourage shareholders to participate in corporate governance and ask them to vote on more issues.
        These changes in the corporate governance system will promote the long-term governance of the regulatory system. The lasting and binding trust between shareholders is an important source of the efficiency of the company, which in turn increases the value of shareholders. Therefore, strengthening the digitalization of the governance system is considered to bring beneficial results. Difficult to crack: the distributed nature of blockchain technology and encryption algorithm make data transactions immune from attack. Because blockchain ledgers are decentralized, this means that replicas exist on many nodes. Node refers to the specific number of computers involved (blockchain applications). In the case of public blockchain, the number of nodes can reach millions. Therefore, for at least 51% of participating nodes, the changes to be made must be verified.
        Cost performance: blockchain technology requires less space on the server, thereby saving disk space. It also reduces the role of intermediary (central server), reduces the cost of any transaction, and eliminates the duplication of work, because all participants can access the shared ledger. It management resources: blockchain technology provides opportunities and challenges for recruitment. Only by combining information technology (it) with resources in the financial field can we understand and take over the required work, because streamlining itself is the task of the audit procedure against the wind. Finding effective resources will be difficult. Adapt to new technology: change is continuous, but some people resist it. In this case, people need to get used to the safe and complete blockchain technology of their transactions.
        This may cause employees to worry about losing their jobs in any organization. According to the requirements of the new working mode, the resources that can effectively deal with the changed working mode can be adjusted appropriately. More use of the Internet: with the adoption of blockchain technology, it will lead to high utilization of Internet bandwidth, because it requires online access all the time to conduct and view data transactions. Digitalization of accounting system: blockchain technology provides a classic substitute for transaction accounting to verify electronically. Many accounting departments' processes and functions can be optimized through blockchain, which will improve efficiency and value. It will help to strengthen the audit work of an organization.
        Promoting employment: blockchain technology provides employment information and opportunities. The combination of Technology (it) and financial resources requires understanding and taking over the required work to simplify the audit process. It will create new employment opportunities. Smart contract audit: smart contract is a computerized agreement contract that implements terms. A company's willingness to enter into a wise contract may represent a pre commitment that will protect the lender from any fraud by the debtor. This may overcome the problem of moral hazard. Therefore, it needs its audit to verify whether. Blockchain Governance: in the public blockchain, there are many nodes reaching millions. Therefore, in order to change at least 51% of the participating nodes, they must be verified and if verified. The wrong transaction can ensure the maximum verification than the problems it raises on the blockchain. Only through the work proof can it be corrected.
        Hacker attack: when there is communication between client and server, hacker attack will occur. There, when a person / software pretends that each party is communicating directly in the process of communication. This may lead to the loss of data integrity, also known as man in the middle attack. Key loss: this threat leads to key loss due to natural failure of general equipment, disaster and electrical failure, acts of war or wrong erasure, or deletion of the wrong folder. Through the analysis and discussion of the research through charts, models and flow charts, the application of blockchain technology in all links of an accounting process, audit and governance system will be a more efficient business.
        Blockchain technology is the core technology of digital financial infrastructure. The closed distributed ledger of blockchain technology plays an innovative role in data preservation. It is complete and available in real time, which initially forms the structure of future accounting. It helps to strengthen a country's financial infrastructure. Organizations improve authenticity and reliability to stakeholders by digitizing core processes. Anyone interested in the company's financial situation can understand the organization's governance system. Therefore, when it comes to transparency, it will win the trust of stakeholders in all aspects of cooperative governance. Blockchain technology has the potential to digitize the entire financial process, which in turn will promote the economic paradigm to reduce fraud and improve execution efficiency.
        The recent scandals of Punjab National Bank and infrastructure, namely the case of leasing and financial services, have attracted attention to the corporate governance system. Blockchain technology is receiving attention in various fields. In accounting and auditing, its application will be one of the most powerful revolutions, but it cannot be used to replace the current financial statement audit. There are many management assertions that financial decisions (capital structure decisions, capital budget decisions, corporate liquidity decisions, dividend decisions, etc.), capital market functions and their impact on capital, corporate structure decisions, etc. are all embodied in human decisions, which are not within the scope of blockchain. Therefore, auditors must cooperate with them to reduce the risk of expert audit cooperating with complex technologies related to blockchain technology.
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