US to Update Evidence Used for Auditing to Include Blockchain

Blockchain technology’s promise is that of an immutable, distributed ledger that is completely transparent. Impossible to tamper with, it is meant to be an unalterable record. Therefore, it would make sense for data stored on blockchains to be considered as valid evidence. Yet, it seems that for audits in the US this was not the case—until now. The Auditing Standards Board (ASB) is updating its criteria to include “emerging technologies.” These criteria will now include AI, robotic process automation, and, most importantly, blockchain technology. According to Robert Dohrer, AICPA chief auditor: “This proposed SAS modernizes our standards to recognize the sources of information and the technologies that were not available to auditors when the standard was last updated.” Of course, the Auditing Standards Board stresses that any evidence taken from blockchain-based systems must, first, establish how reliable said blockchain is. Blockchain-based data may not always provide audit evidence about ownership of value. However, it’s a good place to start. Whereas previously auditors had to rely on electronic or paper forms of ownership, blockchain provides them with an easier tool. It should, therefore, be expected that auditors will have to familiarize themselves with blockchain technology in the coming years. As more and more data moves to blockchain-based systems, this will become necessary for auditors. The news comes at a time when other government agencies have been experimenting with blockchain technology. Last week, the US National Archives and Records Administration announced that is plans to migrate some of its services to onto blockchain to better verify its documents. The FDA, also last week, unveiled similar plans to verify medicine with a distributed ledger system. The pilot program will be a collaboration between the FDA, IBM, Walmart, and KPMG. Overall, it seems like many core functions of the US government are waking up to blockchain’s promise of efficiency and cost-cutting. The fact that the Auditing Standards Board is taking notice of this fact is a good sign. Do you believe that someday a core responsibility of auditors will be to scan blockchains for relevant data? Let us know your thoughts in the comments below.