Blockchain technology has started to shape and shift the nature of today’s accounting constituting a way to vastly automate accounting processes in compliance with the regulatory requirements. One can represent the life cycle of each accounting incident on the Blockchain, including all relevant documents. Entire business processes, spanning over multiple departments or companies become easily traceable. Blockchain technology can allow for smart contracts, i.e. computer programs that may execute under certain conditions. Think of an invoice paying for itself after checking that delivered goods have been received according to specifications and sufficient funds are available on the company’s bank account.
Blockchain as a source of trust can be extremely helpful in today’s accounting structures. It is now started to gradually integrate with typical accounting procedures: starting from securing the integrity of records, to completely traceable audit trails. At the end of the road, fully automated audits are closer to a reality
Please note the approach to “end to end” file integrity is to generate a hash string of the file. That hash string represents the digital fingerprint of that file which is immutably timestamped by writing it into the Blockchain via a transaction. At any subsequent point in time, one can prove the integrity of that file by again generating the fingerprint and comparing it with the fingerprint stored in the Blockchain. The fingerprint should be timestamped right after the creation of the electronic document, even before the document is sent from the issuer to the recipient to rule out the risk of the document being modified over the entire document life cycle.