The AICPA co-published a new report on blockchain that is written primarily by accountants at Deloitte & Touche LLP. The report covers a range of issues from introduction of concept to a call for action for CPAs. It is not an accounting standards publication but rather a white paper on the issue of blockchain.
The decentralized currency transaction system relying on peer-to-peer network technology and cryptography to build a consensus algorithm was first introduced ten years ago. Only in the past year have most small business accountants widely recognized the implications to everyday functions like tax reporting, financial statement preparation and auditing.
The paper refers to the two largest cryptocurrency platforms Bitcoin and Ethereum but notes that the field is evolving rapidly. Blockchain’s impact in financial services, products, healthcare, government and energy are discussed.
Besides the obvious role of blockchain in auditing , blockchain brings opportunities for CPAs to leverage their clients’ adoption of blockchain technology. The report concludes with a call for CPAs to improve their skills that will be required in the future to meet the market demands as blockchain technology becomes widely adopted.
Right now, for me, the implications primarily focus on income tax reporting and small business accounting. I’ve referred to basic rules for income tax return preparation, the risks of not reporting, and the accounting technology that can be integrated with platforms like QuickBooks in other recent blog posts. I anticipate that my earliest paid engagements involving blockchain technology will be representing clients who did not include cryptocurrency gains in their 2016 and 2017 federal income tax returns. Those affected are just beginning to receive IRS deficiency notices. No doubt accountants will continue to monitor this field of blockchain technology as it evolves, looking for opportunities to leverage its benefits.