The blockchain is no doubt a disruptive technology. However, it’s implications for the market aren’t completely understood yet. Here’s how blockchain could transform the audit sphere.
For better or for worse, blockchain is typically linked with Bitcoin. There’s no surprise there, as it was developed specifically to support Bitcoin. Nevertheless, leaving the benefits of cryptocurrencies aside for the time, it’s blockchain which is now being recognized as a technology which will disrupt all sectors. It includes global corporations remaining to invest in new applications.
IBM foresees that 66% of all banks will develop commercial blockchain products by 2020. The potential applications aren’t limited to finance. Actually, according to the report of Markets and Markets, the blockchain tech market will be worth more than $2 billion by 2021.
Audits come in various forms. Whether it’s regulatory audits, compliance, security or financial audit, blockchain can be utilized for all.
With the audit, you are assessing the financial statements. You are choosing activities and accounts to validate accuracy through supporting evidence. With blockchain, this evidence is there through the transaction. Blockchain enables the auditor to make a decision based on the transaction through the whole population.
At the beginning of a new month, accountants close the books on the prior month. This procedure takes anywhere from two business days to a week or longer for those big companies. With the new release of financial systems and technologies, the time needed to accomplish the close cycle is lessening.
For instance, XinFin’s XDC addresses finance deficit and global trade. They architected its network from a form of Quorum and Ethereum. The hybrid technology of the network combines the best of both public and private blockchains. It keeps both, a public state and a private state. The public state makes it verifiable and transparent while private state guarantees that the sensitive financial information is secure.
Every Asset Becomes Trackable
Businesses which concentrate on assets like deeds, titles, mutual funds, bonds and stocks and even inventory could be traced with blockchain technology. In fact, assets become more trackable and secure than ever before.
As transactions occur with blockchain, it’s recorded in the local ledger. It was shared then across other copies of the equal ledger kept by many computers globally. Every time a transaction occurs, it’s delivered to all copies of the blockchain for that particular asset or use case.
Everybody has a certain copy of the history of that specific asset at this point. When a share of stock is purchased, bought, and sold, a record is made. That record is made which can be traced back to the start of its existence in the blockchain. Further, emails, phone calls, and other detective abilities are no longer required when trying to audit an asset.
For all who anticipate blockchain to impact their industry, bear in mind that this technology is defined as a disruptive technology. It will impact all sectors. It’s not limited to those involved in fintech or cryptocurrencies. Consider potential applications for your company today.