Auditing a technology designed for privacy presents unique challenges.
Traditionally, auditors could rely on banks or other third parties to verify much of the information concerning their client’s assets. Yet, with blockchain, those intermediary third parties are eliminated. For auditors, blockchain presents a whole new set of challenges.
“You cannot just go and look at some other company’s records to see that cryptocurrencies or other digital assets exist,” says Markus Veith, partner-in-charge of Grant Thornton’s Northeast financial institutions practice and an SEC, IFRS and blockchain technology specialist. “You cannot really confirm them with the owner. So we’ve had to come up with a methodology through which we could get comfortable with the existence and ownership of these digital assets.”
From verifying assets to establishing appropriate internal controls to ensuring security, blockchain presents a wealth of concerns that auditors need to address. Going forward, it may also present opportunities. “There’s some interesting discussion going on about enterprise financial systems and their ability to write financial transactions directly onto the blockchain and the implications that has for the audit of the future,” says Malcolm Silberman, a Grant Thornton innovation director focused on blockchain and artificial intelligence solutions.
Listen to this conversation with Markus Veith and Malcolm Silberman as they discuss blockchain and the audit.