TrueUp Announces the 2018 Accounting Blockchain Challenge Results

On September 23, 2018, TrueUp, a gamified learning platform for accounting and finance professionals, kicked off the first-ever 2018 Blockchain Challenge for Accountants that brought together accounting students and professionals to learn and explore the new accounting and record-tracking technology poised to change the accounting industry.

After months of reading and watching the speculation, theory, and use cases around how blockchain technology will impact the accounting and audit profession, Vince LoRusso, TrueUp CEO, decided we need to provide accountants a real hands-on experience. LoRusso has significant experience running student case competitions in the past to drive education and innovation on hot topics in accounting.

“Students are the future and creating engaging, educational case competitions is one of the best ways to bring students and professionals together and bridge the gap between a student’s last year in college and their first year in the workforce,” LoRusso says.

He reached out to Jay Chugh, Senior Director of Products, Oracle Blockchain, AI, and IoT platforms, and asked if their team could provide a real blockchain network and interface for accounting students and professionals to get practical experience with the new technology. Chugh saw the need to begin educating the accounting world on blockchain, so he and the Oracle team set up a blockchain network for the student challenge.

The challenge ran for two weeks and brought together 183 students, grouped into teams of 3, representing over 34 different universities, plus accounting and audit professionals from over 30 different firms across the U.S., including 13 of the top 50 CPA firms on Accounting Today’s Top 100 Firms list. Each student team was matched with a firm professional to leverage their real-world experience and perspectives on how the new technology may impact modern-day audit and accounting.

So, what exactly did the students and their mentors get to do with blockchain?

The premise of the challenge was that it is now the future, Year 2040, and the global economy has matured in adoption of accounting bots, blockchain, and A.I. tools. However, we became so reliant on the technology that the a cyberattack on the Global Blockchain Network” caused pure financial chaos. The students were tasked with “going back in time” to 2018 where blockchain exploration and adoption in accounting started. Throughout their mission, they completed tasks focused on some of the most important elements of blockchain technology and transaction flow (e.g. peer nodes, channels and block ledgers, chaincodes (or smart contracts), and use of cryptography and consensus protocols for security and verification).

MISSION: Learn blockchain so we can prevent the Cyberattack of 2040!

There were 4 stages, “blocks” as they were labeled, to complete over the two weeks. The first 3 blocks included a series of bite-sized tasks that students had to complete within the blockchain network. Since 84% of accounting professionals either don’t know what blockchain technology is or they need to know more, TrueUp provided curated, educational content and links to blockchain resources (articles, videos, websites) to the participants. TrueUp also provided translations of blockchain structure and transaction workflow elements into accounting terms, such as peer nodes, channels, chaincodes, endorsement policies, etc. Their team created data sets that simulate distributed ledger activity for students to navigate through and get a sense of what data we may have to audit in the future (e.g. a Chaincode Activity Report, Endorsement Policy Protocols, Channel Ledger Details).

While most of the data sets are simulated reports that we may expect to pull from a distributed ledger, these may vary as blockchain adoption evolves. The content was derived based on LoRusso’s 10+ years of experience as a CPA, including several years in audit, private accounting and month-end close, ERP implementations, and technical advisory, across a wide range of industries such as financial services, healthcare, technology, entertainment, and real estate clients, and he bridged his knowledge of blockchain technology, especially as he worked closely with the Oracle blockchain team and the blockchain instance, to translate the transaction workflow and data into accounting terms.

• For Block 0 (Chaincode Failure!), teams navigated the Oracle blockchain platform to learn the structure of a blockchain network and elements involved throughout the transaction workflow. Then students encountered a “chaincode failure” after trying to execute a purchase order with the end customer. They had to find 6 errors within the chaincode script, and to do this they were provided a Chaincode Requirements Checklist (“CRC”), which TrueUp ideated with an assumption that this could be a key document in the future when accountants will inevitably need to communicate with blockchain engineers the required fields and business logic for a new chaincode (e.g. new sales contract, purchase order, invoices, or other documents that may be transformed into a chaincode). Teams reconciled the CRC with the faulty Chaincode script and once they identified all 6 errors, they unlocked the accurate chaincode, provided by Axiom Technology Group, which they installed and instantiated on their team channel in the Oracle blockchain instance.
• For Block 1 (Map It, Move It, Deliver It), teams were provided an Excel workbook with an inventory workflow diagram that showed relationships between suppliers, manufacturers, the seller (“Smartify”), and end customer, and it included the channels and chaincodes that connect each entity in the business process. Students first mapped the peer nodes (suppliers, manufacturer, Smartify inventory locations, and end customer) to channels and a chaincode. Then on a separate tab they were given a list of transactions, simulating data pulled from the block ledger, and students had to find 5 of the 8 cells in error (intentionally in error, established by the TrueUp game designers), and finally the third tab is where students entered transaction details in order to deliver the inventory to the end customer.
• For Block 2 (Enforce the Endorse), teams were tasked with identifying suspicious endorsers by looking at the 5 riskiest transactions within the provided data set. Within blockchain networks, endorsers are key people who commit transactions to the immutable block ledger and the order of approvals is controlled by consensus protocols and endorsement policies typically established by a blockchain administrator. Students were provided a data set of over 1,700 transactions to upload into the MindBridge.ai tool, which instantly identifies and highlights anomalies within transaction details so an auditor can pinpoint and investigate riskier transactions. Students had to trace the Endorsers of the 5 riskiest transactions back to the Endorsement Policy List provided by TrueUp.
• For Block 3 (Blockchain Migration Plan), teams submitted a 12-minute video to propose their own Blockchain Migration Plan. Students leveraged what they learned in week one of the challenge, performed additional research, and had to address each of the 4 “Fabrics” or topics that can be found here. They had to provide a visual of an accounting process translated into a blockchain-matured world, address costs, benefits, or barriers around adopting blockchain, choose who should administer the blockchain network (e.g. one large regulatory body vs individual businesses), and finally they addressed the skills needed for future accounting and finance professionals in a blockchain world.

After completing each block, teams received a portion of a cryptogram and by the end, once they decoded it, they uncovered the URL to a page that revealed the culprit of the Cyberattack of 2040. Since the challenge is over, we’ll clue you in…the culprit turns out to be a Broken Bot set up in 2019 by a human engineer to jumble the financial economy in 2040. TrueUp is planning a bot challenge for 2019 as a sequel to the story.

Who were the judges?

The accounting blockchain challenge brought together a great panel of judges with strong backgrounds in accounting, audit, tax, blockchain and other accounting technologies, and IT security. Three of the ten judges were recognized as The 2017 Top 100 Influential People in Accounting, including Karen Abramson (CEO, Wolters Kluwer Tax and Accounting), Hitendra Patil (Director of Practice Development, AccountantsWorld), and Amy Vetter, CPA, CITP, CGMA (CEO, The B3 Method Institute).

Professors Kristi Yuthas, of Portland State University, and Gilles Hilary, of Georgetown University, brought perspectives from academia and leveraged their research around accounting systems and blockchain technology. The challenge was also fortunate to have Jay Schulman, Principal of Blockchain and Cryptocurrency at RSM US, and Rahul Shah, Axiom Technology Group, who are each at the forefront of blockchain technology as they work directly with organizations to help explore and adopt the new technology. Lastly, the final three judges each have significant experience and deep knowledge in audit, accounting, and technical advisory, including Stephanie McCasland (Audit Manager, Briggs & Veselka), Opeyemi Oyekanmi (Associate Director, The Siegfried Group), and Victor Choy (Advisory Manager, CNM LLP).

Who were the winners?

Due to the high volume of participation, teams were divided between two separate judging blocks, with two independent panels of judges, and two equal prize pools. There were three placements for each judge block – 1st, 2nd, and 3rd places – while judges voted between the 1st place winners from each block to determine an overall 2018 TrueUp Blockchain Challenge winner.

Team TU014, consisting of Christopher Tash, Jennifer Welch, and Tracy Earll from Portland State University, won the overall title as the 2018 TrueUp Blockchain Challenge winners. They delivered a spectacular presentation by articulating what they learned from week one and integrating their blockchain knowledge throughout the presentation as addressed how the profession can adapt and adopt blockchain technology. Each of the 6 winning videos can be viewed at the 2018 Blockchain Challenge for Accountants Winners page.

JUDGE BLOCK 1 WINNERS

• 1st Place -- Chris Tash | Jennifer Welch | Tracy Earll (Portland State University); Mentor: ­Angeline Johnson, Moss Adams
• 2nd Place -- John Breed | Josephine Lindgren | Richard Gevis (Loyola University Chicago); Mentor: Logan Ohs, RSM US LLP
• 3rd Place -- Alanne Park | John Park | Madoka Tomono (Iowa State University); Mentor: Lucas Luckett, Anders CPAs + Advisors

JUDGE BLOCK 2 WINNERS

• 1st Place -- Michael Chernyshov | Blake Torbeck (CSUN, Northridge and University of North Dakota); Mentor: John Masotti, CPA, MM Blockchain Advisors, LLC an affiliate advisory of Masotti & Masotti, CPA's
• 2nd Place -- Stephen Cecchini | Quinton Fitzgerald | Nate Bieganski (Loyola University Chicago); No Mentor
• 3rd Place -- Andrew LeFevour | Michael Kojsza | Jialin Yu (Loyola University Chicago); Mentor: William McCarthy, BlumShapiro

Thanks to several sponsoring organizations, students were able to compete for an array of rewards, including cash prizes, student memberships to the Wall Street Blockchain Alliance, access to the AICPA’s Blockchain Fundamentals for Accounting and Finance Professionals Certificate to advance their knowledge even further around blockchain in accounting, lifetime access to the VBA Pro Course by ExcelCampus, and autographed copies of Accountaneur: The Entrepreneurial Accountant by Hitendra Patil.

Prize contributions came from RSM US, RKL eSolutions, BlumShapiro, AICPA Learning, ExcelCampus, the Wall Street Blockchain Alliance, and AccountantsWorld.

How did the blockchain challenge come to be?

TrueUp was selected as one of the 2018 AICPA and CPA.com Startup Accelerator winners and LoRusso states that part of the reason the student blockchain challenge happened is because of the AICPA’s focus on raising awareness to the accounting profession on new technologies that are rapidly changing the industry – one of several technologies being blockchain.

“I would like thank the AICPA for bringing to light the rapid pace of change in our profession due to advances in technology. Their startup accelerator program helped bring blockchain to our team’s attention, especially the way Mark Brooks and Greg LaFollette structured the program within providing deep insights into the profession. Then Kacee Johnson’s support in spreading the word about the blockchain challenge generated a lot of interest faster than we anticipated. I’m not sure if our 2018 Blockchain Challenge would have taken place if it weren’t for the support from the AICPA and CPA.com’s startup accelerator team.” says LoRusso.

The AICPA and CPA.com is currently accepting applications for the 2019 startup cohort through November 30, 2018. Full details can be found here.

LoRusso also says a key contribution to the success of the blockchain challenge was integrating the Oracle Blockchain, an actual simulation, into the challenge for students and professionals to learn and explore in a much more interactive way. He says after reaching out to several blockchain solutions providers, Jay Chugh at Oracle was most engaged and mission-focused to get accountants prepared for understanding and ultimately advising organizations on blockchain technology.

Upcoming 2019 TrueUp Student Challenges – Breaking Blockchain and Rise of the Bots

TrueUp is planning two more student challenges in 2019 – one is another blockchain challenge to continue educating the profession and exploring its adoption by organizations and the second is centered around accounting bots to begin educating accountants on bot terminology, bot design, establishing controls around bots, and the skills needed to be a “bot manager”. They are currently speaking You can pre-register for the Bot challenge here.