Technology in Financial Reporting: Cloud, Digital Assets, Blockchain and AI

A set of financial statements was once the end of a long process of writing numbers into ledgers by hand.

Today much of that process is done by software: data flows from sales systems and banks into the accounting system, invoices are read by scanners, routine entries are made by robots, the statements are assembled automatically, filed with regulators in a digital format and analysed by investors with software of their own. New kinds of assets, such as cryptocurrencies, raise questions that the standards did not anticipate.

The accountant needs to understand the technology well enough to use it, control it, account for what it creates and judge its output. This topic covers the stages of financial reporting that technology changes, cloud accounting, artificial intelligence and robotics, blockchain and digital assets, data analytics and digital reporting, and the risks and controls that go with them, ending with the link to the professional code. It is the last topic of the course.

Technology is examined as a written question. In November Diet, 2025, Question 7(b) (3 marks) asked for the merits that companies, accountants and auditors derive from artificial intelligence and robotics, and in November Diet, 2023, Question 6(c) (4 marks) asked for areas of financial reporting that could be enhanced by technology, with discussion of two. Read current issues and new accounting standards first.

Technology across the reporting process

• Data collation. The process starts with identifying and collecting data from many sources inside and outside the business. Integrating the accounting software with those sources automates this, and tools can convert unstructured data into a form ready for the accounting system.
• Data recording. Optical character recognition captures data from source documents (orders, invoices, delivery notes) through scanners or phone cameras and posts them to the right ledgers with little human input.
• Report preparation. An automated system aggregates the ledgers to the general ledger, the trial balance and the financial statements, replacing mechanical processing with accurate, timely accounting and management information.
• Report distribution. Annual reports are hosted on websites and e-mailed instead of posted. Regulated sectors use portals where operators submit returns electronically, and structured digital filing (such as tagged eXtensible Business Reporting Language (XBRL) data using the IFRS taxonomy) lets regulators and analysts read the figures by machine.
• Report consumption. Investors use analytics tools to extract meaning from reports and alternative data, comparing companies, spotting trends and testing forecasts.

As an example, a company processes 2,400 supplier invoices a month. Keying each takes 6 minutes, or 240 hours a month. With optical character recognition and automated matching, each takes 1.5 minutes: 60 hours. The saving is 180 hours, or 75%, which at ₦2,000 an hour is ₦360,000 a month. The time released can be used for review and analysis.

Cloud computing

Many accounting packages are hosted in the cloud. The advantages are:

• no investment in onsite servers and the cost of maintaining them
• access from any device with an internet connection, so the work can be done remotely
• easier collaboration between the firm, the client and the auditor
• scalability up or down without large investment
• automatic updates and back-up

For example, an on-premises system costs ₦6m to buy and ₦1.2m a year to support: ₦6m + 5 × ₦1.2m = ₦12m over five years. A cloud subscription at ₦2.0m a year costs ₦10m over the same period, a saving of ₦2m, apart from the other benefits.

The risks are:

• data security and privacy (the Nigeria Data Protection Act 2023 sets duties on those who process personal data)
• dependence on the provider and the internet connection
• loss of control over where the data is held
• cost growth with usage
• regulatory requirements on the location of data in some sectors

Controls include access management, encryption, back-up and recovery, contract terms and assurance reports from the provider.

Artificial intelligence and robotics

Robotic process automation uses software “robots” to carry out rule-based, repetitive tasks such as invoice matching, bank reconciliations, journal postings and report formatting. Artificial intelligence goes further: machine learning detects patterns in large data sets, flags anomalies and risks, classifies transactions, forecasts cash flows and drafts text. Banks already use it in their platforms, and auditors use it to read contracts and flag unusual items.

• Merits for companies: faster closing and reporting, lower processing cost, fewer errors, 24-hour operation, better forecasting and risk detection.
• Merits for accountants: time released from routine tasks for analysis, judgement and advice; more reliable data; real-time information for decisions.
• Merits for auditors: testing of whole populations rather than samples, detection of anomalies and fraud patterns, more efficient review of documents.
• Limitations and risks: poor data produces poor output; bias and lack of explainability in models; confident but wrong results from generative tools; privacy and security; over-reliance and loss of skills; cost and the need for controls; and the question of who is accountable when the system makes an error.

Blockchain and digital assets

A blockchain is a distributed ledger: a record that many participants hold and update by agreed rules, in which entries are linked cryptographically, so that past entries are very hard to alter.

Potential uses in accounting are shared records between businesses that reduce reconciliation (a transaction recorded once for both parties), an immutable audit trail, smart contracts (code that executes when conditions are met, for example releasing payment on delivery), and tokenised assets.

Limitations include speed and cost at scale, privacy of shared data, legal uncertainty, the energy use of some systems, and the need for judgement about what is recorded, because an incorrect entry is permanent.

Accounting for cryptocurrency holdings

There is no IFRS standard for crypto-assets. The IFRS Interpretations Committee decided in June 2019 that a holding of cryptocurrency (a digital asset that can be transferred and is not a claim on an issuer) is not cash and not a financial asset.

An entity applies IAS 2 Inventories if it holds the cryptocurrency for sale in the ordinary course of business (measured at the lower of cost and net realisable value, or at fair value less costs to sell for a commodity broker-trader), and otherwise IAS 38 Intangible Assets (cost model, or the revaluation model only if there is an active market). The entity discloses the policy and the carrying amounts.

The International Accounting Standards Board (IASB) has been considering the topic in its work on future projects. For example, a company holds 2 units bought at ₦30m each (₦60m) as an investment. At the year end each is worth ₦36m. Under the cost model the carrying amount stays at ₦60m (less impairment if any).

If the revaluation model is available because there is an active market, the carrying amount is ₦72m and the surplus of ₦12m goes to other comprehensive income. Tokens that are claims on an issuer may be financial instruments under the standards on financial instruments.

Data analytics, digital reporting and controls

• Data analytics lets management, auditors and investors test relationships across entire data sets, such as unusual journals, supplier patterns or ratio trends.
• Digital reporting structures the statements with tags so that the figures can be extracted and compared by machine. The sustainability standards and the IFRS taxonomy are also designed for digital use.
• Controls over technology: access and segregation of duties, change management, data validation, back-up and recovery, cyber security, an audit trail, and review of automated output by a competent person.
• The accountant’s competence: the principle of professional competence and due care (see the ethics topic) requires the accountant to understand the tools used, check their output and not rely blindly on it.

The ideas in more depth

Why technology does not remove responsibility

A robot that posts an entry wrongly does so consistently and fast. Responsibility for the financial statements remains with the directors and the accountants who prepare them, so design, testing and review of automated processes are part of the control environment.

Why the accounting for crypto-assets is unsettled

The existing standards were written when such assets did not exist. The treatment as inventory or intangible assets uses the nearest standard, but it can give a carrying amount that does not reflect the economics for an investor, which is why standard setters are considering the area.

Sources and references

• International Accounting Standard (IAS) 2 Inventories and IAS 38 Intangible Assets; IFRS Interpretations Committee agenda decision, Holdings of Cryptocurrencies (June 2019); Nigeria Data Protection Act 2023.

These points are stated as at 5 November 2026.

Worked examples

1. Manual.
   2,400 × 6 ÷ 60 = 240 hours.
   Automated. 60 hours.
2. Saving.
   180 hours × ₦2,000 = ₦360,000 a month.

1. On-premises.
   ₦6m + ₦6m = ₦12m.
   Cloud. ₦10m.
2. Saving. ₦2m.

1. Cost model. ₦60m (the intangible asset standard).
2. Revaluation model (with an active market). ₦72m; ₦12m to other comprehensive income.

How to answer in the exam

• For areas enhanced by technology, name the stage (collation, recording, preparation, distribution, consumption) and describe the tool and the benefit.
• For merits, separate the benefits for companies, accountants and auditors.
• Add risks and controls to show balance.
• For digital assets, state the classification test and the measurement.

Common mistakes in the exam

• Listing tools without explaining the benefit.
• Forgetting the risks and the controls.
• Saying there is an IFRS standard for cryptocurrencies.
• Treating cryptocurrency as cash.
• Assuming that automated output does not need review.
• Ignoring data protection.

Quick revision

• Stages: collation, recording, preparation, distribution, consumption.
• Cloud: no servers, remote access, scalable; risks of security, privacy and dependence.
• artificial intelligence (AI) and robotics: speed, accuracy, cost, analysis; risks of bias, errors and over-reliance.
• Cryptocurrency: IAS 2 if held for sale in the ordinary course, otherwise IAS 38.

Practice questions

These are original questions written in the style of the Institute’s exams. Try each one before you open the answer. Section A is a recall check, because the paper itself is written.

Recall check: multiple choice

Section B style: written questions

A further written question

Model answers

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