22 October 2018
Opening remarks: UNCTAD
Moderator: David Szafran, Attorney, Eubelius. Chair of ISAR 30th session
- What is the impact of digitalization on accounting practices?
- What are some of the risks and opportunities of blockchain technology in accounting?
- What are the main implications for the accountancy profession? What are some emerging good practices in harnessing the digital revolution for high-quality accounting?
David Lyford-Smith, Technical Manager, ICAEW IT Faculty
Peggy Gondo, Partner, PwC Assurance Technology and Innovation
Marco Grossi, Director, Deloitte
Mohini Singh, Director of Financial Reporting Policy, CFA Institute
Interactive debate with the audience
Keynote address: Philippe Arraou, Board member, International Federation of Accountants
- What is the current context for digital currencies from an accounting perspective?
- What are the main technical developments that occurred over recent years in the area of accounting standards for cryptocurrencies? What are some emerging frameworks?
- What are the main challenges in devising standards and practices to take into account digital currencies in financial reporting?
Interactive debate with the audience
The UNCTAD ISAR Workshop is held on a yearly basis right before the ISAR session. It addresses technical emerging issues in the accounting and reporting areas. This year’s workshop focused on emerging issues in the area of blockchain technology, digitalization and cryptocurrencies. These technological developments are creating disruptive changes in the financial sector and their effects, including risks and opportunities, on business practices and the accountancy profession are undeniable. 206 participants from 60 countries registered for the Workshop.
The First panel featured speakers from Deloitte, PwC, the Institute of Chartered Accountants in England and Wales (ICAEW) and the Chartered Financial Analysts (CFA) Institute. They focused on the various applications of blockchain technology including real time and continuous assurance, smart contracts, etc. The also stressed the key features of blockchain, i.e. propagation, permanence and programmability. They spoke of the effects of this technology on the way businesses conduct their activities, and the impact this technology will have on the accounting and reporting procedures, and on the accountancy profession. They also highlighted challenges including the language barrier between accountants and technologists, the need for continuous learning, the lack of clear guidance and accounting standards regarding how to deal with blockchain technology applications, and the need to ensure collective trust. They mentioned opportunities for new assurance and audit services and emphasized that the accounting profession will have a role to play because it will be indispensable to rely on the human insight to make sure that the business transactions are a representation of the reality and to analyze and understand its meaning.
The keynote speaker from the International Federation of Accountant (IFAC) spoke of the need for accountants to quickly adapt to changes in business and the society. He stressed the transformation in business models, the need to anticipate changes and permanently adapt strategies; he also mentioned that new talents and expertise are needed in the market. He said that the impact on the accountancy profession is very high and highlighted changes in legislation, technology; clients and users; and the market.
The second panel featured speakers from financial reporting standard setters namely the Australian Accounting Standards Board (AASB), the Accounting Standards Board of Japan (ASBJ) and the International Accounting Standards Board (IASB). The speakers delved into the financial reporting requirements for transactions with cryptocurrencies and Initial Coin Offerings (ICOs). The speakers from Australia and Japan discussed the different accounting treatment options for entities holding cryptocurrencies in their jurisdictions. The speaker from ASBJ spoke of a new standard issued in Japan which prescribes how to recognize transactions with cryptocurrencies and highlighted challenges related to ICOs including the lack of an established definition of ICOs and tokens, the lack of regulation of white papers associated with the issuance of ICOs, the lack of consistency and the diversity in tokens, etc. The speaker from the IASB presented a summary of the board’s discussions up until now. He explained that IASB has conducted a review of financial statements prepared in accordance with International Financial Reporting Standards (IFRSs) and has also undertaken consultations with the emerging economies group, securities regulators and standards setters. He stated that the board will decide this month whether it will work on issuing a standard on this subject.
The Workshop highlighted the existence of several regulatory, institutional and capacity building challenges related to blockchain, but also stressed new opportunities for those who can adapt and learn not only in a fast but on a continuous manner. It also underscored the increasing number of transactions involving cryptocurrencies and ICOs, and the lack of clarity in the financial reporting standards and lack of consistency in how countries account for them. Regulators need to pay attention to the risks, scams, volatility, money laundering and financing of terrorism. Therefore, addressing the issues posed by digital developments, including by sharing good practices and challenges, is necessary to help stakeholders, regulators, preparers and users of the reports in their efforts towards attaining high quality and reliable reporting.