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From Sensors to Standardized Financial Reports: A Proposed Automated Accounting System Integrating IoT, Blockchain, and XBRL

Author

Listed:
  • Mohamed Nofel

    (Faculty of Commerce, Kafrelsheikh University, Kafrelsheikh 33516, Egypt
    School of Business, University of Leicester, Leicester LE1 7RH, UK)

  • Mahmoud Marzouk

    (School of Business, University of Leicester, Leicester LE1 7RH, UK
    Faculty of Commerce, Menoufia University, Shebin El-Kom 32511, Egypt)

  • Hany Elbardan

    (Business School, Bournemouth University, Bournemouth BH12 5BB, UK
    Faculty of Commerce, Alexandria University, Alexandria 21526, Egypt
    Gulf Finance Center, Gulf University for Science and Technology, Mubarak Al-Abdullah 32093, Kuwait)

  • Reda Saleh

    (Faculty of Commerce, Kafrelsheikh University, Kafrelsheikh 33516, Egypt)

  • Aly Mogahed

    (Faculty of Commerce, Kafrelsheikh University, Kafrelsheikh 33516, Egypt)

Abstract

Modern advances in technology have increased the demand for traditional accounting systems to be upgraded for real-time data processing, security, and standardized reports. Thus, this paper proposes a new accounting information system that integrates IoT, blockchain, and XBRL. The proposed system aims to automate the accounting process by using IoT to collect data and send it automatically to a blockchain, which acts as a database that will generate journal entries automatically through smart contracts. XBRL will then be used as an output method for standardized financial reports based on the data transferred from the blockchain. This paper uses a qualitative research design based on semi-structured interviews with 13 industry experts from IT engineering, academia, and financial systems analysis. NVivo software was used to conduct a thematic analysis of interview transcripts. The findings demonstrated that integrating IoT, blockchain, and XBRL is technically feasible, with significant potential to enhance accounting systems. Additionally, the findings identified key challenges of the proposed system, including the complexity of integration, data validation across technologies, costs, user adoption, and scalability concerns. However, the results showed that this system offers substantial benefits, such as real-time data capture from IoT devices, secure data storage and immutability through blockchain, standardized financial reporting via XBRL, accounting process automation, improved data accuracy, and enhanced security and transparency in financial reporting. The study also identified an optimal mechanism for ensuring seamless data transmission between these technologies. The study makes a valuable contribution to the accounting field by providing a new framework for automating data collection, enhancing data security, and streamlining financial reporting, with significant potential to advance accounting systems and improve transparency, accuracy, and efficiency in financial reporting. The study’s potential to impact accounting systems and financial reporting research and practice emphasizes its importance.

Suggested Citation

  • Mohamed Nofel & Mahmoud Marzouk & Hany Elbardan & Reda Saleh & Aly Mogahed, 2024. "From Sensors to Standardized Financial Reports: A Proposed Automated Accounting System Integrating IoT, Blockchain, and XBRL," JRFM, MDPI, vol. 17(10), pages 1-30, October.
    • Handle: RePEc:gam:jjrfmx:v:17:y:2024:i:10:p:445-:d:1490641
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    References listed on IDEAS

    as
    1. Autore, Donald & Chen, Huimin (Amy) & Clarke, Nicholas & Lin, Jingrong, 2024. "Blockchain and earnings management: Evidence from the supply chain," The British Accounting Review, Elsevier, vol. 56(4).
    2. Valentinetti, Diego & Flores Muñoz, Francisco, 2021. "Internet of things: Emerging impacts on digital reporting," Journal of Business Research, Elsevier, vol. 131(C), pages 549-562.
    3. Sundarasen Sheela & Ahnaf Ali Alsmady & K. Tanaraj & Ibrahim Izani, 2023. "Navigating the Future: Blockchain’s Impact on Accounting and Auditing Practices," Sustainability, MDPI, vol. 15(24), pages 1-26, December.
    4. Cynthia Weiyi Cai, 2021. "Triple‐entry accounting with blockchain: How far have we come?," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 61(1), pages 71-93, March.
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