How blockchain can be a game-changer for auditing is a big question of almost all investors and scholars. Here are the reasons for the investment of blockchain auditing.
How blockchain can be a game-changer for auditing
This is the way blockchain becomes a game changer for auditing. Take it!
Crypto Assets or crypto currency – blockchain auditing
We acknowledge hacking by a simple majority, for example, 51%, of the nodes on a BC is possible, even if improbable.
The immutable transaction history is powered by BC/DL address accounting assertions in a much more robust way. All confirmations such as occurrence, completeness, breakpoint, accuracy, etc., are all remembered for the set of transactions on the blockchain, providing an improvement in control accuracy compared to with traditional periodic sample-based validation testing.
Auditing Blockchains’ limitations
Blockchains are not a panacea and will not cure all that harms accounting and auditing. There are clear limitations on where and how blockchains can contribute to the next generation of commerce and accounting practices. In the near future, BC/DL will definitely be used for the main ledger of large units. Most BC/DL on the horizon will be for additional shared or supported sub-ledgers within or between collaborating individuals or organizations.
The implication for internal controls and audits is that the control environment and audit approach to cryptocurrencies must address the entire blockchain ecosystem and not just the blockchain itself to warrant review or control. comprehensive control test. For private BCs, the auditor will need to define the BC ecosystem.
Auditing the Broader Blockchain/DL Ecosystem
By research input from Rutgers and other major universities, Lukka found that accounting firms and others will soon be extracting infrastructure data about blockchains into a secure record database system as well. your whole presentation. These could then include running continuous automated control analysis with a versatile “analytic tool” to track risk-based blockchain system audit controls in three key areas. of the audit framework outlined above. Thereby providing an example of why we recommend that the structure of these new audit methods include the use of continuous controls/analyses and continuous monitoring.
- Protocol Recognition (Is protocol analysis secure, complete and appropriate for this blockchain use case/application?)
- Consensus Mechanism (Does the public or private Blockchain follow its Consensus Mechanism?)
- Transactions & Smart Contracts (Are common combinations of transactions and smart contract controls in place to reduce the risk of smart contract manipulation and hacking?)
Smart blockchain Auditing Analytics
Another much-anticipated approach to performing exhaustive system testing on a blockchain or distributed ledger is to set up a read-only “audit” node on a public or private blockchain with analytic oversight controls. executed as a smart contract in the blockchain. Smart audit analytics will be approved by consensus mechanisms.
In the near future, blockchain will force auditors and accountants to promote the use of automation, including automated analytics and continuous monitoring, thus improving audit coverage and effectiveness!
Want to know more about blockchain auditing – let’s SmartOSC experts help you!
Contact us if you have any queries about Blockchain development services.