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What should accountants do in times of Blockchain & Artificial Intelligence?

Blockchain technology is the biggest trend of internet in the future. Distributed ledger is currently the largest application of blockchain. It is a technical solution to collectively maintain a reliable database in a decentralized manner. All data in the distributed ledger can be cross-verified and jointly supervised to ensure that the data is authentic and cannot be tampered with. This is the most basic feature of the blockchain technology.

Once an enterprise uses blockchain technology, it can reduce the error rate when adjusting complex and different information from multiple parties. In addition, the financial records in the blockchain cannot be changed once generated, even the administrator of the accounting system cannot change it. Because every transaction will be recorded and verified, the authenticity of financial records is guaranteed.

The blockchain also transmits value on the basis of transmitting real data, which is a brand-new way of transmitting value. In the future, blockchain technology will be more closely applied to the accounting industry. Although accounting and auditing are not the central areas of the application of blockchain technology, the application of blockchain technology in accounting and auditing can save high costs. The accounting and auditing industries involve enterprise production and operation data and records. The application of blockchain technology in this field can solve the problems of opaque information, easy tampering, and mistrust.

The impact of blockchain technology on financial and auditors is huge. In the future, blockchain technology will finally be able to meet the transaction needs of the enterprise itself, and there is no need to trust a third.

Also, with the continuous development of artificial intelligence technology, financial robots appear in the accounting industry, and many large accounting firms have launched financial robots. Financial robots can replace complex manual operations, manage and monitor various automated financial processes, enter information, merge data, summarize statistics, and identify advantages in financial processes based on established business logic judgments.

Financial robots are more suitable for repetitive, single-dimensional, high-frequency financial tasks, and tasks that require more interaction with machines. Correspondingly, highly repetitive, non-strategic financial tasks will be replaced by financial robots. In the future, financial professionals with simple, mechanical, and repeatable tasks like bookkeeping will inevitably be eliminated.

Although AI can only replace simple financial tasks at present, with the outbreak of AI, AI may also replace complex financial tasks in the future. Though it may take a relatively long time.

So, what should we do and how to prepare?

There are many types of financial work. Blockchain may replace auditors, and financial robots may replace basic accounting work. However, independent thinking and forward-looking work can hardly be replaced by machines. The low-frequency, strategic, and human interaction-based decision-making tasks are still mainly handled by financial personnel, and AI is responsible for assisting us.

In basic terms, there is always in need of human factors-human intelligence. And, artificial intelligence will create more job opportunities than it replaces. Accounting and finance are more than just numbers and algorithms. We need specialist to analyze and interpret the AI data. Therefore, human wisdom will not be obscured in any way.

Since we can no longer change the fact that science and technology will change the industry, then we can choose to embrace it and find new ways to add value to enhance ourselves. In the accounting industry, in addition to the influence of artificial intelligence and blockchain technology, the development of the industry has also been changing. The best way for a financial person and accountants to respond to changes is to learn to change, seize opportunities, and change the current basic financial accounting work direction to strategy and decision-making  management accounting.change, seize opportunities, and change the current basic financial accounting work direction to strategy and decision-making  management accounting.

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How can the accounting profession succeed under the technological revolution?

With the development of today's intelligent technology, it is inevitable that many repetitive tasks will be replaced by computers and robots. At the same time, new prospects will emerge along with future economic development.

Artificial intelligence's efficient computing systems can help people accomplish monotonous, repetitive, and time-consuming tasks. It can achieve much higher precision and precision than humans. Nowadays, a lot of work is done by computers. Computers rely on algorithms to make certain judgments or classifications. For example, when a customer applies for a credit card or opens an account, the computer might automatically classify you as a customer type, such as determining whether you can open an account.

The biggest impact of the technological revolution on the financial community is the new "ABC" - artificial intelligence, blockchain, and cloud computing. And data makes the "ABC" work. Especially for large companies, there are huge amounts of data to be processed. AI catalyzes data collection and analysis. Blockchain ensures data security. Cloud computing makes data sharing possible. There is no denying that artificial intelligence has become an assistant to human research and industrial development, so will accounting be replaced by artificial intelligence? Based on the study by researchers at Oxford University and Deloitte, The BBC analyzes the risks of automation for 365 jobs in the United Kingdom in the future. Among them, they stated that the probability of operators being replaced by AI is 99%. It is also interesting to see that the probability of an accountant is as high as 95%.(BBC News, 11 Sep. 2015)

First of all, in today's accounting industry, artificial intelligence replaces simple and repetitive low-value accounting work, and enterprises no longer need a large number of basic financial personnel. With the continuous progress of management technology, other management accounting, cost accounting, environmental accounting is no longer the basic position of enterprises.

Secondly, the rise of big data, application development, and cloud computing has made financial work more efficient. Artificial intelligence has replaced all time-consuming and repetitive work. Cloud computing enables information and data sharing more quickly, and people can access their data anytime and anywhere, fundamentally changing the operation mode of enterprises.

Finally, accounting work, because the rules and unified, repeat degree is high, it is easy to replace artificial intelligence, the industry's demand for basic accounting personnel is inevitable. However, what artificial intelligence replaces is simple and repetitive low-value accounting work, while management accounting will not be completely replaced by artificial intelligence, because this part of work requires human wisdom and experience. The future accounting industry will pay more attention to management accounting, which requires accountants to transform, strengthen the learning of management accounting knowledge and the accumulation of experience. Therefore, accountants need to change to be successful in the accounting profession.

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Impact of Blockchain Technology on Accounting

The potential impact of blockchain technology on the accounting field has attracted the attention of many accounting firms, and the "big four" accounting firms have responded positively and quickly to blockchain technology. The Big Four firms are in a leading position in blockchain research and accounting practices.

However, the emergence of every new technology may affect the audit industry from many aspects. For example, the technology may be applied at the client level of the firm, thereby affecting the plan of the firm or giving higher requirements to their knowledge and skills. Another example is that this technology may be applied in the audit industry, which will have a certain degree of impact on the efficiency of the work. So, what impact will blockchain technology have on the accounting field?

First of all, blockchain technology will improve work efficiency and reduce audit costs. Blockchain has the potential to further improve the accounting industry by reducing the cost of maintaining and adjusting account books, and at the same time, it can provide absolute certainty of asset ownership and history. When blockchain technology applied in company, they can directly keep transaction records into the joint register. Thereby it creates a durable accounting record interlocking system. Since all entries are distributed and cryptographically encrypted, it is almost impossible to destroy or manipulate them to hide the corresponding records. This will allow accountants to verify large amounts of data in a short period of time, and the cost and time required to conduct an audit will also be greatly reduced.

Secondly, blockchain technology will bring disruptive changes to the business model of accounting firms. At present, some companies have begun to develop application systems that can realize automatic auditing. These applications will greatly liberate the original manual auditing, allowing CPAs to concentrate their limited energy on challenging business. In addition, a series of tasks, including tax compliance are possibly going to automatically processed through the blockchain technology. These changes will make the traditional business profit model unsustainable which will make firms must to explore new profit models. There is no doubt that blockchain will bring disruptive changes to the current accounting business model. As for how far the impact of blockchain technology will reach on the accounting industry is still not completely clear.

How to deal with the impact of "blockchain technology" on corporate finance?

Companies must continuous attention to the business environment, pay attention to innovations in new technology fields, and identify new potential threats and opportunities. It is also necessary to quickly understand the impact of emerging technologies and trends on existing businesses. Try to use the more mature new technology applications or software to accelerate the transformation of corporate accounting management and enhance the efficiency of corporate financial processing. And cooperate with technologically innovative companies to formulate a better financial strategy to perfect the innovative solutions of the firm.

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1.     Blockchain Technology & Accounting

In 2009, blockchain appeared in the public eye as an emerging internet technology. Blockchain technology is actually the underlying technology of Bitcoin. It is a new application model of computer technology such as distributed data storage, peer-to-peer transmission, and consensus mechanism. The essence of blockchain is a decentralized accounting system, and Bitcoin is the currency "in digital form" carried on this system.

Accounting is an important way to record, reflect, and calculate a series of economic transaction activities and value movements which has an important impact on human production and lifestyle all the time, and vice versa. Especially the emergence of every new technology that affects human production and lifestyle, may have an impact on the development of accounting. From double-entry bookkeeping to the formation and maturity of cost accounting, to the development of management accounting, almost every step of accounting development is driven by new technologies. In the past decade, with the development of information technology, technologies represented by ERP and CRM have been widely used at the enterprise level, which has greatly improved the efficiency of corporate financial accounting and management accounting.

 With the increasing maturity of cloud computing and big data technology, it has been accepted by more and more companies in practice. A large number of new accounting forms and models such as financial analysis centers, cost centers, profit centers and cash centers have begun to emerge. Although the application of these new technologies has a profound impact on the development of accounting which is still not subversive. In the current accounting, records are still based on a "centralized ledger". Under this accounting model, every transaction of a listed company and the financial statements of each fiscal quarter are inseparable from the strict audit of professional auditors. Every transaction of each individual and organization may face the risk of loss due to information asymmetry.

  However, a new technology has been gradually unearthed with the emergence of the digital currency boom. The "unearthed" of blockchain technology may bring a disruptive change in the existing accounting system, which may become the ultimate solution to the above-mentioned problems.

 In fact, blockchain provides the availability of a new type of accounting ledger that can be updated continuously and verified without the threat of alteration or damage. The Internet has provided us with a powerful way to share and obtain information, and today the blockchain provides us with a powerful way to share and obtain value. The essence of the blockchain is a secure and credible distributed database, and a peer-to-peer internet technology that serves distributed ledger.

In recent years, blockchain technology has begun to enter the accounting industry. Blockchain has broken the traditional accounting method and increased the transparency, security and timeliness of corporate financial information. It has also improved the efficiency of regulatory agencies and reduced regulatory costs. With its unique advantages of distributed ledger, it can achieve full audit coverage, real-time compliance monitoring and automated tax compliance reporting within the scope of the account books. Thereby, it significantly improves the work performance and user experience of users, accounting firms and regulatory authorities.

 Although the application of blockchain technology in the accounting field is still in experimentation and small-scale exploration, it has shown strong advantages in reducing costs, increasing revenue, and improving customer experience. The Big Four accounting firms such as Deloitte and PricewaterhouseCoopers all have carried out strategic layout, team building and technology platform research and development, and plan to focus on the development of a comprehensive accounting and auditing professional service system based on blockchain technology.

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How artificial intelligence will impact the development of the accounting industry?

The development of technology will have an impact on many industries and not only on the accounting industry. It will change the way of how people live and work. Artificial intelligence is a new stage in the development of science and technology which means that automation and informatization will be further improved.

The application of artificial intelligence in the accounting industry will be the future trend. Looking back on the evolution of technology for the accounting industry, in fact, it has also experienced the development from manual bookkeeping to computerized accounting. Various accounting and financial software are becoming more and more "advanced” or we could say it is getting more and more intelligent. There are more tasks which require manual processing can be automatically solved by the system. Artificial intelligence will be another revolution for the accounting field. As an accounting student, I think this is a good news somehow that we should be happy about and get ready for it.

This so obviously that people who work in accounting industry, especially the entry level staffs have a heavy workload. At the end of the month and tax season, they will often work overtime. However, there will be more tasks can be automatically done by the system with the development of artificial intelligence. As long as accounting people understand how to use the system, they can easily handle a big number of accounts with a few operations on the keyboard. Hence, it will improve the status of accounting and they can get off work on time which also simplified the work with higher efficiency and greatly reduced the work intensity for the staffs.

Imagine that if there are two companies are recruiting, one company has a more advanced system which uses AI to handle accounts, and the other one’s accounts are handled manually. Which firm would you decide to work if the salary and benefits are the same?

Since artificial intelligence can automatically handle some tasks in accounting industry, the staff structure of a firm's accounting department will inevitably change in the future. The change here does not simply mean a reduction in the number of personnel. Many people think that the application and development of artificial intelligence in accounting will take over many accounting personnel’s’ job, and staff of accounting department will decrease eventually. In fact, in my opinion, the application of artificial intelligence in the accounting industry will only replace standardized and repetitive tasks. But there are still many tasks that cannot be standardized which is difficult for the system to automatically do it. Those non-standard and non-repetitive work in accounting will still have to be processed manually.

If artificial intelligence will really applied in the future, it can only replace part of the work for accountants, and there are still many tasks to be done manually which improve the work efficiency. Therefore, the development of artificial intelligence will not cause large-scale unemployment in accounting industry. As an accounting student, I feel that even if there are no external factors such as artificial intelligence, we must always keep studying and strengthen the accumulation of knowledge. Everyone wants to get promoted rather than doing basic entry level work. The accounting industry is the one that requires relatively high professional knowledge. Always maintain a mindset of endless learning! Successful people know learning never stops and knowledge is infinite. We do not have to worry about the development of artificial intelligence, all we need is to be well prepared to adapt the development trend of the industry.