Systemizing the Challenges of Auditing Blockchain-Based Assets
33 Pages Posted: 2 May 2019
Date Written: March 21, 2019
Firms transacting using blockchain-based assets and liabilities have begun to enter capital markets in search for funding. Historically, firms have been able to raise substantial funding without an audited financial statement, however we project that in the future, audits will become a common requirement given increased competition among firms, increased scrutiny from regulators, past instances of fraud, and firms seeking an IPO. At the time of writing, accounting firms are hesitant to accept mandates from companies that hold a significant amount of cryptoassets primarily because the blockchain market introduces novel, technically sophisticated, and risky propositions that auditors are unequipped to handle. Through interviews with senior accounting professionals and structured brainstorming meetings with a multidisciplinary team of accountants and blockchain experts, we critically analyze the purported roadblocks to auditing blockchain firms and map them to traditional auditing practices, demonstrating that providing an audit opinion is challenging but not insurmountable.
Keywords: Blockchain, Financial Audit, Cryptoassets, Accounting Firms, Auditors, Cryptocurrencies
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