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Establishing the representational faithfulness of financial accounting information using multiparty security, network analysis and a blockchain

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  • McCallig, John
  • Robb, Alastair
  • Rohde, Fiona

Abstract

This paper aims to develop a design for an accounting information system that will enhance the representational faithfulness of financial reporting information. One of the functions of financial reporting is to aggregate and report the entity's private data. This paper shows that recognizing that some of the firm's private data is already shared with others allows the methods of multiparty security to be applied to the reporting and audit processes. We contend that using both public key cryptography and network analysis allows the identity of an entity to be modelled as a place on a network. We also develop accounting recordkeeping techniques to balance public access with privacy using a blockchain. Taken together, these three design ideas can enhance the representational faithfulness of financial reporting systems because they use shared data from independent entities, a transparent system, and open-access immutable storage. Faithful representation is enhanced because information from this system can be used by auditors to support their audit opinion or by stakeholders who need credible information about the entity.

Suggested Citation

  • McCallig, John & Robb, Alastair & Rohde, Fiona, 2019. "Establishing the representational faithfulness of financial accounting information using multiparty security, network analysis and a blockchain," International Journal of Accounting Information Systems, Elsevier, vol. 33(C), pages 47-58.
    • Handle: RePEc:eee:ijoais:v:33:y:2019:i:c:p:47-58
    DOI: 10.1016/j.accinf.2019.03.004
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    References listed on IDEAS

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    Cited by:

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    5. Antonella Paolini, 2022. "Gestione integrata dei dati e performance aziendali," MANAGEMENT CONTROL, FrancoAngeli Editore, vol. 2022(2), pages 5-14.
    6. Ji Liu & Zheng Xu & Yanmei Zhang & Wei Dai & Hao Wu & Shiping Chen, 2022. "Digging into Primary Financial Market: Challenges and Opportunities of Adopting Blockchain," Papers 2204.09544, arXiv.org.
    7. Marco Bellucci & Damiano Cesa Bianchi & Giacomo Manetti, 2021. "A literature review on blockchain in accounting research," Working Papers - Business wp2021_04.rdf, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.
    8. Han, Hongdan & Shiwakoti, Radha K. & Jarvis, Robin & Mordi, Chima & Botchie, David, 2023. "Accounting and auditing with blockchain technology and artificial Intelligence: A literature review," International Journal of Accounting Information Systems, Elsevier, vol. 48(C).
    9. Diego Valentinetti & Michele A. Rea, 2022. "Blockchain e bilancio di esercizio: verso una convergenza di interessi "distribuita"?," MANAGEMENT CONTROL, FrancoAngeli Editore, vol. 2022(2), pages 15-40.
    10. Garg, Poonam & Gupta, Bhumika & Chauhan, Ajay Kumar & Sivarajah, Uthayasankar & Gupta, Shivam & Modgil, Sachin, 2021. "Measuring the perceived benefits of implementing blockchain technology in the banking sector," Technological Forecasting and Social Change, Elsevier, vol. 163(C).
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