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Twenty-five Rhode Island accountants are preparing to be guinea pigs for a digital ID program using blockchain technology that, if successful, could transform the way state government is conducted in the future.
November 12, 2021
The R.I. Department of Business Regulation is spearheading the initiative, using certified public accountants who have Real ID-compliant driver’s licenses as testers of a system designed to generate accounting credentials in a mobile format within minutes of using blockchain-distributed ledger technology.
CPAs would no longer use paper credentials that can easily be faked, instead relying on secure blockchain technology to protect identities and CPA licenses.
If the accounting pilot program works, the digital system would be expanded to include other state departments, according to DBR Director Elizabeth M. Tanner.
“This [will be] a decades long project, but you have to start somewhere,” Tanner said. “We’re starting with something of low excitement [in accounting] because we wanted to make sure we could test it. We believe that we could be the first in the United States to have this kind of a system set up.”
Right now, the R.I. Board of Accountancy – which is overseen by DBR – issues paper CPA licenses to people who pass an exam, complete 15 hours of post-graduate accounting education, spend a year working under a licensed CPA and receive a high grade in an ethics course.
Under the new system, digital credentials can be shared via a mobile app in clickable link form, making verification almost instantaneous. Verification of a credential is done over the blockchain, a digital records archive or ledger of transactions that evolved out of the cryptocurrency industry. Blockchain is an expanding list of records connected via cryptography, algorithms designed to protect information, forming a digital chain.
The state’s pilot program began in early November.
‘We believe that we could be the first … to have this kind of a system.’
ELIZABETH M. TANNER, R.I. Department of Business Regulation director
William R. Pirolli, a board member of the American Institute of Certified Public Accountants and partner at Warwick-based DiSanto, Priest & Co., was the first CPA scheduled to participate.
“I am very proud that Rhode Island is the first in the country to implement digital licensing for CPAs,” he said. “I am excited to be among the first to have my license to practice stored and verified in this format. We are ahead of the curve in innovation.”
Melissa Travis, CEO and president of the Rhode Island Society of Certified Public Accountants, said that a digital credentialing system provides a fast, secure way for accountants to adapt their record-keeping practices to modern technology. This technology will soon be widespread, especially as blockchain and cryptocurrencies become more prevalent, she said.
“This is a natural progression of our accounting practices,” Travis said. “This will be the standard very quickly in our industry and bring the state of Rhode Island into the digital age.”
Travis said a unique piece to the state’s credentialing is that Tanner is a recognized global blockchain expert.
“She is the first person I know to become an e-resident of Estonia, which is the blockchain capital of the world,” Travis said.
Tanner said that while working for the R.I. Commerce Corp. she learned about blockchain technology after researching ways to make it easier to do business in the state. Her research led to a review of business practices in other countries, where she discovered that Estonia, a tiny country in northern Europe, had created a digital identity system.
“So, I became an e-resident of Estonia to get a better sense of it,” Tanner said.
What she discovered in blockchain was a new way of doing business without the use of paper, eliminating the repetitive steps of filling out documents, using instead a secured, central digital system of government.
Tanner said every state wants a “one-stop shop” where people can go through one website to fulfill a task. “No state in the country that I have seen is doing anything like this,” she said, noting that her department operates almost entirely by using a similar electronic record-keeping system.
Sandesh Shetty, director of client services in the Providence offices of global tech goliath Infosys Ltd., has been working on the blockchain pilot program for three years. He said a “digital wallet” on a mobile app will facilitate the use of the identity blockchain technology.
“[The digital wallet] will have a QR code on it that will help identify a person’s blockchain identity,” he said.
A digital wallet is utilized to convey sensitive identity-related information when completing an application or seeking a license or service. That circumvents the need for a document or records search to complete an application or service request.
Pirolli said the pilot program will provide verifiable proof of status as a fully licensed CPA authorized to practice. It will also streamline the renewal process by verifying an identity to DBR and allowing for digital sharing of continuing education information.
Shetty said participants download the digital wallet containing their credentials to begin the process. The digital wallet becomes the place where their identity information is stored, updated and shared with recipients.
Infosys has built a system connected to the R.I. Department of Motor Vehicles, utilizing Real ID licensing to verify the credentials of the program’s participant accountants.
The next step would be to integrate the state’s governmental system. The DBR’s system will serve as the foundation for the digital infrastructure, so departments can be added to the system, he said.
“This is a very big leap for the state. It is a big move,” Shetty said.
Cassius Shuman is a PBN staff writer. Email him at Shuman@PBN.com.