What is blockchain and why should you care?
A blockchain is a decentralized ledger of transactions across a peer-to-peer network. It could offer financial services firms a more effective way to handle a whole range of transactions, with use cases like payments, derivatives, settlement, securities, syndicate lending, trade finance, and more. Although blockchain technology is still maturing, one of the most significant issues involves assurance that it works, even more than details about how it works.
What’s causing concern for internal audit?
Here are a few reasons why Internal Auditors might struggle with blockchain:
- Blockchain is very new. The first implementation was less than a decade ago.
- Controls are new, too. This could lead to uncertainty around control implementation, access rights, and monitoring.
- Technical expertise is rare. Even in IT departments, few firms have deep experience. It can be even harder to find in control functions.
Despite the uncertainty, you can rest assured
To help move beyond the uncertainty, firms should consider steps such as:
- Evaluating the business use case and needs of all stakeholders.
- Assessing the underlying cryptography.
- Examining how their specific network has been set up, how reports are generated, and the controls that exist over the blockchain.
- Performing ongoing reviews to assess the effects of any systemic changes.
The blockchain technology can bring an array of benefits to companies. However, this will require companies to assure stakeholders that blockchains have been set up effectively with appropriate reviews and controls.
