Blockchain; distributed ledger technology, able to record every single transaction in blocks that are time-stamped and part of a chain. It is transparent, incorruptible and fool-proof: transactions cannot be altered, thus rendering it a safe and efficient process. Blockchain really is all it is touted to be; a new age method to record every financial transaction in a permanent way, safeguarding it against potential tampering and doing without a central party to oversee the process. It would be, however, extremely erroneous to believe that the audit trail Blockchain provides precludes the need for human auditors.
The crux of the matter lies in the fact that transactions and records are not generated automatically. There is human intervention before, during and after a transaction takes place, necessitating a third party controller to check for fraud and human errors. Essentially, while the record is a permanent fixture on the chain, the process fails when it comes to recording the reason behind the transaction and its nature. Accountability, ironically, is limited in this sphere.
Despite its excellent traceability, the blockchain phenomenon should not be viewed askance by auditors and finance professionals. Nor should businesses believe they have the perfect audit if their records are simply submitted on the blockchain without checks in place. If anything, it should be seen as a tool that does some of the “dirty”, repetitive work that takes its toll on resources, freeing up the auditor’s time for more analytical tasks. The auditor will still have an important say in determining whether the entire process is doing what it is supposed to do, defining the parties with access and managing controls.
The accuracy with which we can deal with financial transactions in the very near future is unparalleled in the history of finance. That is not to say that every company can start recording on blockchain as from tomorrow; these revolutions (no matter how swift) will still take time until they trickle down to the smallest enterprise. However, we are already witnessing change on a massive global scale. The auditor’s game has not taken a backbench – on the opposite, it has levelled up considerably. Auditors will be required to shed time spent on petty, periodic payments, and invest more time into insightful analysis that can seriously affect business operations.
Call us if you wish to know more about how blockchain can impact your business and how we at TACS can help you maximize its potential.
