Blockchain Technology and Its Potential Impact on the Audit and Assurance Profession

Blockchain was first introduced as the core technology behind Bitcoin, the headline-grabbing decentralized digital currency ecosystem proposed in 2008. The appeal of blockchain technology lies in its use of peer-to-peer network technology combined with cryptography. This combination enables parties who do not know each other to conduct transactions without requiring a traditional trusted intermediary such as a bank or payment processing network. By eliminating the intermediary and harnessing the power of peer-to-peer networks, blockchain technology may provide new opportunities to reduce transaction costs dramatically and decrease transaction settlement time. Blockchain has the potential to transform and disrupt a multitude of industries, from financial services to the public sector to healthcare. As a result, a number of venture capital firms and large enterprises are investing in blockchain technology research and trials to re-imagine traditional practices and business models.

In recent years, blockchain technology has evolved far beyond bitcoin and is now being tested in a broad range of business and financial applications. However, blockchain technology is still emerging and has not yet been proven at enterprise scale, which is a fundamental challenge to blockchain’s transformative potential. In addition, many accounting firms have undertaken blockchain initiatives to further understand the implications of this technology. It is important for the audit and assurance profession to stay abreast of developments in this space, and we encourage Chartered Professional Accountants and Certified Public Accountants (collectively, CPA auditors) to learn more about this technology. The focus of this paper is to explain blockchain technology and how it could potentially impact the financial statement audit, introduce possible new assurance services and new roles for the CPA auditor in the blockchain ecosystem.