Sujata Seshadrinathan, Director, Basiz Fund Services

A Global Leader in Fund Administration. Sujata holds a Doctorate in Business Administration from SP Jain School of Global Management, Singapore/India focussing on Blockchain adoption. She has over 20 years of experience in software design and development and fund administration services. Her experience in software includes process management, skills management, and product design. She has deep expertise in several domains, in a vast array of technologies starting from mainframes to Java, the latest being blockchains. Sujata has developed automated technology solutions and products for accounting applications in the fund industry, Legal Tech. among others. She holds two Patents for products designed in the fund administration and legal services space. She has also led several projects for process engineering based on Six sigma architecture from inception to implementation and handled SSAE certifications for various verticals. Her research interests include technology adoption, blockchains, and accounting information systems.


Blockchain technology, heralded as potentially impactful as the internet itself is expected to shapeshift the very way accounting applications are used.  Blockchain is a distributed database of records, an immutable public ledger of all transactions or digital events that have been executed and shared among participating parties.  Here instead of keeping records centralized in a traditional ledger, independent computers, referred to as nodes, are used in an integrated manner to record, synchronize and share individual transactions in their respective electronic ledgers. 

The current accounting scenario

The accounting function is a mandatory and regulated function in all types of business enterprises world over. While accounting has benefited from Information Systems (IS) empowered platforms, very little process improvement has happened beyond the mere move to electronic records. For instance, multiple records of transactions within an entity and disjoint recording of the same transaction by various parties to it are still the order of the day. This leads to the need for elaborate control mechanisms and audits, albeit recorded on IS, that is merely a replica of manual processes. A centralised system as a solution to this situation on the other hand will bring along its own challenges like necessitating a trusted third-party intermediary maintaining it.

Blockchain – the panacea

Blockchain holds the potential to bridge the requirements gap in accounting while transforming it in all stages, such as recording, reporting, analysis, and interpretation. A shared ledger with concurrent data updates, immutability and an audit trail make it a solution that would also address the challenges of the current accounting IS. The use of peer-to-peer network technology combined with cryptography enables parties who are unknown to each other to conduct transactions on a blockchain without requiring a traditional trusted intermediary. This is referred to as “disintermediation”.  That does not however mean the participant nodes assume trust in each other. The system in fact relies on a complex consensus process whereby the nodes agree on a version of the “truth” or the fully validated transaction to be recorded, making it the enforcer of trust. 

“Smart contracts” on the blockchain have the terms of agreement between two or more parties programmed electronically and executed automatically on the underlying blockchain as a response to application events that are also encoded within it. This streamlines the complex process of involving several human intermediaries put in place to establish trust among the participants in a transaction. 

Over and above disintermediation and an immutable ledger, blockchain is also the first reliable implementation of the “triple-entry” booking system.  This system requires transaction processing authorization from a third neutral intermediary, apart from the two parties involved in the transaction. While the currently used double-entry system by itself gives a very balanced view of accounting information it does not provide comprehensive assurance for companies’ financial statements, thereby necessitating independent audit. Blockchain implements the triple-entry accounting system via additionally registering a cryptographically-sealed third entry in the blockchain itself.

What however needs to be well comprehended is the fact that all the above-described structures are implemented into the architecture and the interface for the end user i.e., the accounting professional will be much more streamlined than before. While they are the beneficiaries of an IS with a single data source that is immutable and has an in-built audit trail, the system usage by itself will be simpler than before in keeping with expectations of the times.

Addressing the concerns

There has however been some cynicism surrounding the practicality of usage of blockchain for accounting applications. These explicitly identify consensus models, accessibility, privacy and security as concerns. Consensus models like Proof-of-Stake (PoS) and Practical Byzantine Fault Tolerance (PBFT), as alternatives to Proof-of-Work (PoW) that was used so far, have proved much better for accounting purposes. Permissioned and private blockchain are used to address confidentiality and access issues depending upon the requirements of the specific use case as against permissionless and public blockchain. Additionally, these also facilitate a more streamlined IS with faster response time. 

Concerns among the accounting fraternity stemming from the lack of knowledge however are genuine and need to be appropriately addressed via measures like training programs. The paradigm shift in all the associated controls and processes will necessitate diligent management and planning if adoption is being considered. 


Blockchain today is widely anticipated as the apt solution for accounting with shared distributed networks which meets the participants’ need to trust the validity of the transactions that are recorded. The key benefits of considering blockchain-based accounting are:

  • immutability – no one can modify/alter records or their order, once it is recorded
  • security – of the personal data and information
  • trust – via disintermediation, consensus and smart contracts
  • speedy transactions – through digital content distribution enabling information availability to all stakeholders without replication
  • ease of use – end users have reduced burden of cumbersome IS and control systems
  • mitigation of risk and frauds – through smart contracts, digital rights management controlling access permissions and user roles


Content Disclaimer

Related Articles