CPA Practice Advisor

MAY 2017

Today's Technology for Tomorrow's Firm.

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32 MAY 2017 ■ www.CPAPracticeAdvisor.com TECH TRENDS By Mary Ellen Biery To be certain, many accountants could make a full-time job out of simply trying to understand the various types of technology that can make their personal lives easier and their practices more profitable and secure. However, three technol- ogy trends are of particular interest to public accountants because of their potential to transform major aspects of the profession. These three trends are: the progress of blockchain technolog y, the continued shift to the cloud, and advances in automation. Below are brief descriptions of each trend. 1 PROGRESS OF BLOCK- CHAIN TECHNOLOGY Some industry experts believe that blockchain technology can be used to revolutionize account- ing in several areas, but the term and some of its descriptions have left many people confused. One of the best explanations of what blockchain technology is comes from a startup that is developing blockchain technology for financial transactions. In an interview with the Wall Street Journal, Digital Asset Holdings CEO Blythe Masters described blockchain simply as a form of database architecture: "You all know what databases are, you use them in your different busi- nesses extensively. The thing about databases is they're siloed and they're generally centralized, and they're owned and managed by someone who has unilateral editorial rights. So when multiple parties to a common transaction interact, they are inclined to keep their own separate records of their respective piece of a joint transaction, and that leads to tremen- dous inefficiencies. An enormous amount of time, particularly but not limited to financial services, is spent reconciling the differences between records kept in distinct databases that ultimately refer to the same transaction between two parties. Blockchain technology, or distributed ledger technology, is just a way of using the modern sciences of encryption to enable entities to share a common infrastructure for database retention." In other words, instead of com- panies keeping and then reconciling records of the same transaction in their separate, privately managed databases, or ledgers, both sides of the transaction are recorded simultaneously in a shared ledger. Some in the accounting profes- sion believe blockchain technology is currently at the height of the "hype cycle." Though enthusiasm about this technology is high, experts do foresee several practi- cal potential uses of blockchain technology in the profession. For example, this technology could help create completely traceable audit trails or ultimately automate the entire audit process. Other blockchain potential uses outlined have included authentication of transactions, tracking ownership of assets, and development of "smart contracts," or computer programs that could pay an invoice after confirming that delivered goods have been received as promised and confirming that sufficient funds are available for payment. 2 CONTINUED SHIFT TO CLOUD COMPUTING Erik Asgeirsson, president and CEO of CPA.com, has noted that the shift KIMBERLEY N. ELLISON-TAYLOR, chairman of the AICPA, recently noted that technology tops her list of the most important trends shaping 2017 because it will drive so many of the profession's opportunities and challenges in the year ahead. But how are accountants supposed to keep up with all of the technological trends? 3 T E C H T R F O R A C C T O W AT C

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