The relationships among accounting, accounting information system and Blockchain technology

NGUYEN CAO QUANG NHAT (Faculty of Business Administration, Sonadezi College, Dong Nai Province, Vietnam) and MA. NGUYEN VAN DUNG (Financial Accounting Department, Lac Hong University, Dong Nai Province, Vietnam)


Since the introduction of the Internet in the early 1990’s, the adoption of Internet technologies grown exponentially. Most new echnological applications are either used or developed by using Internet technologies. Blockchain technology, which was used to invent the best-known crytocurrency Bitcoin. The Blockchain technology has significantly affected  accounting. This article presents an overview on the Blockchain technology and analyses relationships among accounting, accounting information system and the Blockchain technology.

Keywords: Accounting, accounting information system, Blockchain.

1. Introduction

Blockchain technology has experienced exponential growth and innovation is driven by developers, start-ups and enterprise in all areas. The World Economic Forum has listed blockchain as one of the top ten emerging technologies of 2016 (CMA U Lakshmana Rao and Pandurangiah 2018). Major changes in established business systems can take place very quickly in our times. Those business that are not prepared suffer irreparable damage. Similarly, those in higher education should also be prepared for this upcoming major shift in business information systems, not just in the MIS field, but in accounting, banking, finance, economics, law, and beyond. People across the world have been demanding more “transparency” in corporate and government dealings, and blockchain public ledgers can also satisfy this global need (Brandon 2016). Distributed Ledger Technology, the so-called Blockchain, is revolutionizing the Internet. On the other hand, the Internet itself is changing, following the requests of those who wish that it became not only a place of information exchange, but also a virtual place to exchange actual values. Blockchain is set to be one of the most disruptive technologies to impact a variety of industries. One of these industries is accounting, with the introduction of blockchain the way that transactions are processed, retained and data audited will be vastly different. To understand these impacts we have to first examine the history of Blockchain technology (Iansiti and Lakhani 2017).

Today, the information about blockchain technology has attracted a lot of attention. However, one thing that people may know less about is that blockchain technology has a great influence on Accounting and is certainly a technology trend that employees in Finance - Accounting math cannot be "ignored" in the future.

2. Overview

2.1. Blockchain Technology

Currently there are many different documents about Blockchain. In this article, the author will summarize some concepts to help us better understand Blockchain and its activities. Blockchain has been enabled by a set of modern technologies including the internet, open-source peer-to–peer protocols (BitTorrent), rapid digital communications, enormous computing power, and modern cryptography. It is an electronic shared, replicated, distributed (organizationally and geographically), and decentralized transactional file. CIA is a central trait of a blockchain since a transaction is committed in real time to the blockchain and connected via a hash to all those transactions that came before it. The transactions persist forever and cannot be deleted nor modified. To ensure availability, the entire block chin of transactions is continuously replicated across many servers so that there is no central point of failure. Privacy is guaranteed by rigid credential checking techniques and protected through modern encryption (Brandon 2016).

Blockchain is a technology that is based on distributed ledgers.  The ledgers consist of “blocks” of information that are tied together cryptographically.  This allows multiple parties to view the contents inside the block while what is inside the block remains protected. Common characteristics of blockchain include real-time distribution, authentication of each block by consensus (use of cryptography), and validation of each block. It is difficult to alter the historical records as each transaction and addition is time stamped. The blockchain also includes programmability to execute certain transactions without further action by users (U.S. House).  The blockchain is further described as “a digital ledger of economic transactions that is fully public, continually updated by countless users, and considered impossible to corrupt.  It is a list of continuous records in blocks” (Carlozo 2017).

In the study of CMA U Lakshmana Rao and Pandurangiah (2018) said that, Blockchain is a kind of distributed database and is one of the Distributed Ledger Technologies (DLT) where data is recorded, stored and sorted into blocks. Unlike centralized database, in Blockchain data is stored in various participating nodes. Blockchain is an enumerated list of records containing information. The individual enumerated records are called blocks and chained together using a cryptographic hash that is linked to previous block. Together these blocks are called as distributed ledger. The origin of the block is called genesis block and is the starting point of the chain. The data stored in Blockchain are immutable which means blocks created once cannot be altered without having cascading effect on previous blocks. Since it is distributed ledger technology, Blockchain facilitates peer-to-peer transaction without involvement any other third party. A Blockchain is a type of distributed ledger can contain financial or non-financial transactions replicated across the network on peer-to-peer network using cryptography. Bitcoin is a type of unregulated digital currency know as cryptocurrency. Whereas, Blockchain is a distributed ledger technology that enables and maintains Bitcoin transaction ledger over peer-to-peer network without central authority. Distributed Ledger Technology (DLT) is a technological protocol that enables data to be exchanged directly between different contracting parties within a network without the need for intermediaries. The network participants interact with encrypted identities (anonymously). Each transaction is coded and added to an immutable transaction chain. This chain is distributed to all network nodes (ledgers), thus preventing the alteration of the chain itself (Iansiti and Lakhani 2017).

Blockchain technology was developed to aid in the operation of cryptocurrencies, most notably Bitcoin. It essentially is a new way of storing information online securely and with greater transparency. Most online information is currently stored on servers, including cloud technologies. Data using this model is only as secure as the server that it is located on as the entirety of data is placed in a single location. Data on servers are also not transparent as they can only be viewed by users that have access to the server. Blockchain technology utilizes a different method of storing data, instead of storing the entire data set on a single server, data is fragmented into blocks stored over multiple servers using a peer-to-peer network. Each block of the data is verified and then assigned to a server where it will be stored. Blocks that relate to the same set of data is strung into a chain. Data is secure as multiple servers in multiple locations hold data and it is practically impossible to hack all the necessary servers to obtain the full set of data. Further, data contained in each block is inherently resistant to modification and can only be altered by accessing all data in the entire chain. The inability to access the entire chain by an unauthorized person creates a safe environment and leads to data being widely viewable, which in turn leads to greater transparency as data can be viewed but not altered by multiple users (David Rose and Volschenk 2018).

Figure 1: How Blockchain works


Source: (CMA U Lakshmana Rao and Pandurangiah 2018)

2.2. Blockchain and accounting

Blockchain is an accounting technology, which deals with transfer of ownership of assets and maintaining ledger of accurate financial information.  Use of Blockchain can increase the potential of accounting profession by reducing the cost of maintaining and reconciling ledgers. This may be a threat to accountants as automated reconciliations take away the work of accountants.  But, Blockchain empowers the accountants that an asset exists with proven authenticity.  However, the economic reality or economic value has to be validated by accountants (CMA U Lakshmana Rao and Pandurangiah 2018).

Blockchain technology may represent the next step for accounting: instead of keeping separate records based on transaction receipts, companies can write their transactions directly into a joint register, creating an interlocking system of enduring accounting records. Since all entries are distributed and cryptographically sealed, falsifying or destroying them to conceal activity is practically impossible. To explain the notion of Blockchain-based accounting some researchers use the term Triple-Entry Accounting which is described as an enhancement to conventional double  entry accounting where the accounting entries of the involved parties are cryptographically sealed by a third entity (the Blockchain). (Grigg 2005, Mills, Wang et al. 2016)

Fig. 2.  Centralized vs Distributed Ledger


Source:(Bansal and Batra 2018)

Blockchain is an accounting technology, which deals with transfer of ownership of assets and maintaining ledger of accurate financial information. Use of Blockchain can increase the potential of accounting profession by reducing the cost of maintaining and reconciling ledgers. This may be a threat to accountants as automated reconciliations take away the work of accountants. But, Blockchain empowers the accountants that an asset exists with proven authenticity.  However, the economic reality or economic value has to be validated by accountants (CMA U Lakshmana Rao and Pandurangiah 2018). Blockchain Technology can be potentially used in accounting and audit function.  Blockchain ensures traceable audit trails, automated accounting and reconciliations, tracking of ownership of assets, authentication of transactions.  Blockchain can be used as a source of verification for reported data.  The days of sample based will soon be a history, as the auditors may soon use Blockchain Technology to test the entire population of transactions of a period under audit.  This will extensively improve the level of assurance (CMA U Lakshmana Rao and Pandurangiah 2018).

According to Blockchain accounting applications are sometimes called “triple entry bookkeeping”. In double entry bookkeeping, every transaction is entered twice: as a debit and as a credit. With blockchain there are three entries that occur: the debit, the credit, and the cryptographic signature of the transaction. There are really three parties also, such as: the buyer, the seller, and the blockchain network. With the blockchain, all of the transactions exist on many networked computers instead of just one mainframe (or server farm) with backups. The concept is similar to that of the US DOD Arpanet that was the foundation for the Internet. A distributed network with many servers and communication lines was built so that the loss of one (or a few) would not take the entire system down. For the accounting application it is possible that the account balance part of the application data would remain in a relational form on the organization’s mainframe or server and the transactions would be placed in a NoSQL blockchain, as illustrated in the figure 3 below.

Figure 3:  Blockchain is secured in terms of compatibility of has string


(Source: Brandon 2016, Sarkar 2018)

However, the advantages of blockchain in accounting go far beyond just providing a more efficient and secure IT process for large organizations. Both internal and external accounting audit procedures involve confirming transactions and balances that are stated on the organization’s financial books. However, the transactions on the blockchain ledger can be confirmed as true and accurate without having a third party auditor confirm these transactions. This accounting application of blockchain can be extended beyond a single company. Now consider this on a countrywide or even worldwide basis for all organizations and their vendors and trading partners. If there was just one blockchain, instead of one for each company, then the redundancy reduction and cost/time savings would be huge. Essentially blockchain provides an automatic capability to verify accounting transactions between multiple business partners while maintaining data privacy. Conceivably external audits could be fully automated, and thus, the role auditors would be significantly reduced and perhaps even completely eliminated. The Depository Trust and Clearing Corporation is already testing a blockchain distributed ledger in short term lending markets to reduce risk and allow financial firms to share information in real time. (Pilkington 2015)

Blockchain had put an end to the traditional methods of billing, documentation, processing, registering, inventory systems, and paying for business. The technology will allow companies to record both sides of a transaction simultaneously in a shared book in real time, rather than keep audited records of financial transactions in separate privately created databases or accounting books. The need for traditional double-entry accounting will disappear, as the legality of accounting will be fully automated. Therefore, consideration of issues related to the use of the blockade accounting infrastructure in the block is important and relevant (Aleksy Kwilinski 2019).

2.3. Blockchain and accounting information systems

Today, companies are trying to implement Blockchain into their Enterprise Resource Planning (ERP) systems, particularly for tasks such as procurement and supplier management. Blockchain ledger-based technology can simplify the procurement process because it enables secure recording of transactions in a way that can lead to unprecedented transparency and increased operational efficiency (Tysiac 2017).  Potekhina and Riumkin (2017) said that Real-time Blockchain Accounting System (RBAS) is a software solution that enables transactions of currency, financial derivatives, and other digital documents between two or more counterparts, stores the transaction data in cryptographically protected blocks whose integrity is verified through the process of mining, and allows the composition of financial statements at any time. For companies and their stakeholder to obtain all the benefits provided by the technology it is necessary that a RBAS possesses the following properties: fist, Transparency - the transactions must visible in real-time as it is the case with bitcoin; second, Immutability - there must not be a programming possibility to change any data once they were entered, to ensure this, the company using the system must not control the mining power; Third, Accessibility – the data must be easily accessible to a broad range of stakeholders. Financial statements are prepared at regular intervals and sum up what has happened in a firm’s ledger throughout a certain period. An auditor then issues an opinion on the accuracy of the financial statements. Outsiders, such as investors and credit risk managers, have to trust both that the auditing is thorough and unbiased and that the firm has not given false information to the auditor. That is, the concept of trust is critical in both the preparation of the financial statement and in the auditing process.  This is where the Blockchain technology behind the bitcoin can play an integral role.

3. Discussion and Conclusion

It may be remarked that while the landscape for Blockchain technology is still in its infancy, its potential is transformational. Blockchain transaction tools offer the greatest opportunities for change in various accounting mechanisms, and creating a new platform to reshape the accounting and accounting information systems. Blockchain is arguably the most discussed technology of this decade and there is every reason for that. As a sort of indestructible and incorruptible ledger, blockchain accounting offers to record data in a way which can be simultaneously accessible by auditors and regulators. This could potentially reduce the need for accountants to record transaction in separate locations with almost no way to consolidate and validate the same. Blockchain accounting is capable of providing a much more transparent and secured accounting framework to track transaction and assets. Hence traditional accounting is at the verge of a disruption which will redefine the role and need of accountants in an industry. Instead of record keepers, accountant will soon require to become interpreters and direct facilitators in decision making. Blockchain came to the world’s attention thanks to its role as the underlying technology behind Bitcoin, the most popular cryptocurrency. However, Blockchain has much farther reaching possibilities than digital currency. Blockchain, a distributed ledger technology, has the potential for applications in the stock market, banking, and beyond. One industry that is sure to see disruption from Blockchain is accounting. From audit to bookkeeping, Blockchain has the potential to improve efficiency, reporting, and data access in a way never before seen.


  1. Aleksy Kwilinski (2019). Implementation of blockchain technology in accounting sphere. Academy of Accounting and Financial Studies Journal, 23(2), 2-3.
  2. Brandon, D. (2016). The blockchain: The future of business information systems. International Journal of the Academic Business World10(2),33-40.
  3. Carlozo, L. (2017). What is blockchain? Journal of Accountancy224(1), 29.
  4. Rao, U. L., & Pandurangiah, S. (2018). Blockchain Technology Will it Disrupt or Discipline Accountants? The Management Accountant Journal, 53(6), 42-46.
  5. David Rose, & Volschenk, E. (2018). Blockchain & Accounting. 7.
  6. Grigg, I. (2005). Triple entry accounting. Systemics Inc journal, 15(4).


   7. Iansiti, M. and K. R. Lakhani (2017). The truth about blockchain. Harvard Business Review95(1), 118-127. 

     8. Mills, D. C., Wang, K., Malone, B., Ravi, A., Marquardt, J., Badev, A. I., . . . Kargenian, V. (2016). Distributed ledger technology in payments, clearing, and settlement.

   9. Pilkington. (2015). Research Handbookd on Digital Transformations: Edward Elgar Publishing. ISBN 1784717762.




          ThS. Nguyễn Cao Quang Nhật

Khoa Quản trị Kinh doanh, Trường Cao đẳng Sonadezi

ThS. Nguyễn Văn Dũng

Khoa Tài chính Kế toán, Trường Đại học Lạc Hồng


Kể từ khi Internet ra đời vào đầu những năm 1990, việc sử dụng Internet đã tăng lên theo cấp số nhân. Hầu hết các ứng dụng công nghệ mới đều được sử dụng hoặc được xây dựng dựa trên công nghệ Internet. Trong thời gian gần đây, công nghệ Blockchain đã thu hút sự chú ý trên thế giới với vai trò là công nghệ cơ bản của loại tiền điện tử Bitcoin. Công nghệ Blockchain có ảnh hưởng lớn đến Kế toán. Bài viết này trình bày nội dung cơ bản của công nghệ Blockchain và phân tích mối quan hệ giữa kế toán, hệ thống thông tin kế toán với công nghệ Blockchain.

Từ khóa: Kế toán, hệ thống thông tin kế toán, Blockchain.