A group of accounting and tax professionals has established a grassroots coalition to get their arms around blockchain and what it will mean for the accounting profession.
Representing accounting, tax, law, technology, and academia, the Accounting Blockchain Coalition has formed to figure out and educate the profession on digital assets and distributed ledger technology, including blockchain, and its accounting and audit implications. The coalition wants to serve as a knowledge-sharing platform as companies address the changes and opportunities created by the adoption of blockchain technology.
“Our mission is to educate businesses and organizations on accounting matters as this new digital asset class emerges,” says Dave Deputy, president of the ABC board and director of strategic development and emerging markets at tax services firm Vertex. “We are a membership organization to contribute knowledge, expertise, and provide resources to the industry.”
Board members for the upstart group hail from audit firms like BDO USA, Crowe Horwath, and RSM, and technology firms Microsoft and ConsenSys, plus Vertex and Michigan State University. The group has divided its work into four primary focus areas — audit and accounting, internal controls, regulatory and external compliance, and taxation.
“This new asset class has a lot of gray areas,” says Deputy. Given the fast pace of emergence of blockchain technology, coalition founders say they are already seeing different accounting and tax treatments, suggesting the need for experts to put their heads together and come to some consensus. “These are currently volatile assets that need to be accounted for, so where is that asset and where is that liability? The rapid change has necessitated a group getting together that can publish best practices and disseminate materials.”
So far, the nonprofit group has met via monthly calls to membership but it will meet live in May as part of a “Blockchain Week” event in New York. The group is a planning a series of talks and presentations from accounting firms, enterprise users, technology experts, and regulators to address accounting, audit, and tax issues.
The group also plans to release deliverables by the end of the year, Deputy said, to try to address some areas where uncertainty is already apparent. A notable example includes questions surrounding custodianship of digital assets, with distributed ledger technology eliminating the traditional intermediaries, like brokers and financial institutions.
“The owners of accounts have control directly,” says Deputy. “The exchange doesn’t take custody of that. How do you account for that? How do you reflect the reality of that distributed business model?”