A QUT study of blockchain hesitancy in accounting found participants agreed on its efficiency and transparency but were deterred by blockchain's complexity and cost of integration into existing accounting systems.

The study looks at the organizational-level adoption of blockchain accounting and empirically identifies factors affecting the uptake of blockchain technology for recording transactions. The article, "Looking beyond the hype: The challenges of blockchain adoption in accounting," was published in the International Journal of Accounting Information Systems.

Ph.D. researcher Mohsina Akter, Associate Professor Tyge Kummer and Dr. Ogan Yigitbasioglu, from QUT's School of Accountancy interviewed 19 participants, including experts from three Big Four accounting firms, IT professionals, blockchain experts, senior managers and CEOs.

Akter said blockchain had been hyped as a game-changer for accounting transactions as it enabled triple-entry accounting and real-time reporting.

"Blockchain enables distributed, immutable ledgers that record and verify transactions as they occur and distribute the same copy of the ledger to participating 'nodes' in the network," Akter said.

"This creates a chain of accounting records instead of retaining separate records and increases the transparency of information for everyone involved.

"Blockchain holds promises for improving the accounting and auditing processes. However, application of the technology at the organizational level remains limited.

"Our study provides insights on the limited uptake of blockchain accounting in organizations."

Participants cited these blockchain benefits:

• Blockchain brings efficiency in the recording process by reducing the reconciliation needed across ledgers, reducing errors and fraud, and enabling instantaneous verification of transactions.
• Blockchain provides the same copy of the ledger across the network, bringing increased transparency and reliability of information and trust in the network.
• Traceability and immutability of records make it difficult to manipulate information and facilitate fraud detection.
• Enhances reputation as an innovative and high-tech firm.

However, Akter said the participants raised concerns about the integration and interfacing of blockchain with existing accounting systems, involving comprehensive knowledge of the technology and coordination with many diverse parties.

Other barriers to adoption are:

• The high initial investment of education, infrastructure and integration costs and the large computing resources needed for blockchain deployments.
• A lack of understanding of blockchain, the problems it could solve, and the value it could bring to the accounting domain.
• The lack of proven use cases in the accounting domain and limited availability of blockchain-led accounting solutions.
• Concerns over privacy and data security in sharing information on blockchain networks.

"Our findings show that an organization's intention to adopt blockchain in accounting is multifaceted. It not only depends on the technology itself but also on factors such as organizational readiness, top management support, and external pressures, all of which play a role in driving the adoption decision," Akter said.

More information: Mohsina Akter et al, Looking beyond the hype: The challenges of blockchain adoption in accounting, International Journal of Accounting Information Systems (2024). DOI: 10.1016/j.accinf.2024.100681