#4 Perks Auditors Can Enjoy By Embracing Blockchain Technology
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The skepticism around Bitcoin and cryptocurrency is not stopping economies around the globe, especially companies operating in the BFSI sector to adapt to the technology behind the digital currency i.e. blockchain.
In a recent report, Association of Chartered Certified Accountants (ACCA) outlined four areas where the blockchain, also known as the distributed ledger technology, can help auditors straighten the auditing process.
Humongous Data Analysis
Key to audit is the impeccable record of transactions from the time they first entered the ledger, the report said and added that the potential for a comprehensive audit trail that cannot be tampered with by malicious actors is appealing.
This may help auditors reduce the cost of fraud detection and the need for further checks on the transaction data.
Limitation Related To Sampling
Chances are that the immutable records also lead to multiple roadblocks when it comes to sampling as the present process is necessitated by human limitations on the time and cost of reviewing transactions.
With a blockchain, it is possible to generate an exception report that reviews all transactions rather than just a selected sample of them.
From a probabilistic point of view, this would be more robust and help cancel out any uncertainty about the audit conclusions, the report added.
Increase in the Number of Audits
Auditing is an annual exercise. Blockchain may help auditors improve the frequency of the process, maybe on a quarterly or monthly basis. In fact with this new-age technology, even a real-time audit can be given a thought.
Moreover, as the frequency of the audits improves, there are little chances that the transactions can be adjusted in advance of scrutiny, ACCA pointed out.
Additionally, this will help the auditors enhance their understanding of the business as the engagement is no longer based on a snapshot at a given time of the year. It will facilitate prediction of trends or future risks.
The above three points, ACCA believes, will increase confidence among the auditors and help them evaluate a fair picture. It will also provide time to deepen understanding of the overall business model, rather than reducing the audit to a tick-box compliance exercise, the report said.
Furthermore, blockchain is believed to have arrived at the right time to promote activities such as the extended audit report that are laying emphasis on developing this deeper understanding of the business.