Mastercard, Amazon, Walmart and several other leading companies are embracing blockchain technology. Institute of Management Accountants (IMA), a professional body of financial professionals, recently came up with its potential implications in the industry.
Blockchain Education Could Be Valuable to Finance Professionals
IMA’s report published on June 12, 2023 says, “As blockchain technology expands into multiple industries, it will be important for management accountants and finance professionals to stay knowledgeable about how blockchain can be a value add to their organizations. We must remember that blockchain adoption extends well beyond cryptocurrency and has been utilized to improve organizational efficiencies such as real-time access to financial reporting and other operations data.”
The document points to several areas where the technology can improve operational efficiencies for management accountants. Real-time data on blockchain can effectively boost decision-making and risk management. Moreover, constant monitoring and instantaneous audits would keep cyber-evils at bay.
Blockchain integration will naturally reduce operational costs considering redundancy in unnecessary data transmission and related costs. Data integrity may further help in reduction of these costs. The report notes error-tracking through the technology can eliminate time and effort consumed in finding fallacies. In addition to security, its tamper-proof nature can prevent alteration in transactions.
Real-time data may effectively allow the management team to mitigate risks associated with corporate compliances. Know Your Customer (KYC) and Anti-Money Laundering (AML) compliances have become necessary tools for regulators to identify unethical practices including terrorism financing, money laundering and more.
Authors of the report highlighted that ethical and governance risks are manageable. It mentions issues identified by Reid Blackman, author of Ethical Machines. Given the decentralized nature of blockchain, intermediaries are sidelined from its operations. Customers cannot appeal to a certain authority as there is none. For this, the report suggests obtaining informed consent from users, while keeping non-blockchain workarounds provided the situation.
Data privacy is no more under a person’s thumb, especially after events including the U.S. National Security Agency (NSA) document leak by a former computer intelligence consultant Edward Snowden, Facebook-Cambridge Analytica Data Scandal, and more. The IMA report notes that major blockchains including Bitcoin (BTC) and Ethereum (ETH) are open to the public, pointing to increased risk to user privacy.
IMA suggests management accountants should go for private blockchains to mitigate potential risk factors given the kind of data they deal with. To cope up with the zero-state problem, which arises due to genesis block’s data being in question, the report mentions proper monitoring, thorough training of individuals adding blocks and audit via a reliable third-party.
A blockchain is usually governed by a Decentralized Autonomous Organization (DAO), an organization managed using smart contracts in part or whole. Different DAOs on different blockchains may hold diverse governance structures. The report recommends, citing Reid Blackman, management accountants get hold of it to tackle potential legal, ethical, financial and reputational risks arising out of it.
The Technology is Spreading Its Roots at Full Tilt
A rising number of businesses are adopting blockchain for operations and payments. A survey conducted by Casper Labs, a software company, found 87% of the respondents are planning to invest in blockchain. Interoperability, cynicism, and limited developer knowledge remain obstacles for broader adoption.
Today, large companies including JPMorgan, International Business Machine (IBM), Abu Dhabi National Oil Company (ADNOC) and many others are using blockchain. A lot of people still use the term interchangeably with cryptocurrency. However, its use cases go beyond digital assets. Experts believe the technology will thrive even if virtual currencies go into oblivion.
Anurag is working as a fundamental writer for The Coin Republic since 2021. He likes to exercise his curious muscles and research deep into a topic. Though he covers various aspects of the crypto industry, he is quite passionate about the Web3, NFTs, Gaming, and Metaverse, and envisions them as the future of the (digital) economy. A reader & writer at heart, he calls himself an “average guitar player” and a fun footballer.
Source: https://www.thecoinrepublic.com/2023/06/13/ima-discusses-blockchain-utility-for-management-accountants/