Good news and bad news. The “new” blockchain and distributed ledger technology (DLT) can bring speed, cost savings and a whole lot of other benefits BUT it could prove to be problematic for audits and financial reporting. Obviously with a distributed ledger there is a lack of a paper trail which could make inspections a wee bit harder. But don’t worry, FINRA is aware and working on those ‘problems. Hmmmm, maybe Bernie Madoff was lost in the DLT during those decades of inspections.
“Technologies like blockchain are changing the face of auditing, according to a senior official of an oversight board created by the US Congress.
Speaking during an investor event in New York last week, Jeanette Franzel, a board member for the Public Company Accounting Oversight Board (PCAOB), said she believes distributed ledgers could bring both opportunities and problems for auditors, should financial firms adopt the tech in a significant way.
Franzel remarked: “These potentially disruptive changes will present challenges and threats across the auditing profession, including the need for significant investments in technology, new management and technical skills, and even new firm business and organizational models. Of course, these developments will present new corresponding risks to audit quality.”
Notably, Franzel isn’t alone in this view.
FINRA, the self-regulatory agency for the brokerage industry (over which the PCAOB has authority), said in a report issued in January that blockchain could both reshape the work its members do as well as the standards it develops…”