A new report released by the UK Financial Reporting Council (FRC) has reviewed the potential impact of blockchain technology on the future of corporate reporting processes, concluding that those involved with such processes “need to consider its (blockchain’s) potential disruptive impact”, according to Lexology.
The main focus of the report identified challenges which DLT might address and the degree to which blockchain might be successful. The report concluded that the growth of the technology and its increasing use would impact on those involved in corporate reporting.
The areas identified for potential impact included production, distribution and consumption. The report added that cost and lack of standardization of blockchain could be inhibiting factors in corporate reporting going forward.
Regarding production, the report found that these issues might be significant and it was argued whether blockchain transaction might improve accounting recording systems.
Distribution was regarded as a key factor discussing current issues with transportation and it was thought that the European Financial Transparency Gateway – a blockchain European cooperate reporting platform – might be considered as a way of tracking through a single source, offering up-to-the-moment reporting across the board.
In terms of consumption, the report found that “blockchain might help to rethink the way that reporting content is defined”, and went on to suggest that, although blockchain looked like it was here to stay, its implementation would be gradual and restricted to “certain use-cases”.
The cost of blockchain and ease of its use in its implementation in corporate reporting seemed to be the main stumbling block in giving DLT carte blanche as the ultimate reporting tool, but the FRC acknowledged that blockchain could offer “a single source of credible, usable corporate data across Europe”.
The report finally suggested a cautionary mode in all things blockchain, with regulators becoming involved in the corporate reporting system and the development of a blockchain forum, which would be a space for participants to discuss ideas, risks and opportunities of blockchain technology and how it applies to this sector.
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