How to align accounting controls with blockchain technology systems

When large firms deploy blockchain applications to record transactions on digital ledgers to enhance transparency and speed of transactions, lower control risks, and reduce transaction costs, their accounting systems are affected. We explore equilibrium conditions under which a unit in a firm will align its accounting controls (ACs) to adhere to blockchain technology (BT) standards to which other firm units adhere. Specifically, we investigate the conditions under which a unit within a firm integrates with a BT platform used by other units and standardizes its ACs to enable compatibility with the BT system standards in operation. We assess conditions under which units of firms that do not utilize BT link up with those that have adopted BT. We compare different sequential scenarios where choices are made by the firm units to adopt BT before or after standardizing their ACs. Our findings indicate that the proportion of BT adopting units affects the continued integration of ACs across a firm. The likelihood of a firm unit standardizing its ACs to align with the firm’s BT standards increases where the firm’s units show more diversity of operations. This is particularly so if the firm unit adopting BT and harmonizing its ACs makes only a small impact on the existing BT-using units within the firm. We discuss the practical implications of our findings and identify research possibilities to further extend knowledge in this emerging domain.