Question

Simply put, a blockchain can be considered to be a distributed ledger which contains the relevant
details for every transaction that has ever been processed. Conduct a desktop research and based
on this research:

i. Define blockchain technology, including its basic structure;
ii. Describe the current and potential uses of this technology by business;
iii. Given (i) and (ii) above, what impact will this technology have on the traditional audit process?  

Answer 1

1. Define blockchain technology, including its basic structure ?

Blockchain Technology , If I take an Example of Business world , Every Business entity have an Unique Id which is used for cryptography along with Public and Private Key which help in secured way of Data Transferring between the sender and receiver.It is not possible or not allow any other person to interpt or modify or alter or stop the data because secured cryptography Key which is uses Public key and private key for encryption of data and Transferred

If one Business entity Called ‘A’ want to buy a product from The Business Entity ‘B ’ , After Negotiation of Prices and at the time of Making The payment by the buyer to the concerned person before placing the purchase order, It ask several Details like a Memo/Purchase Requisition such as, from which company buying, ID of such company,Price,Quantity,Date,Taxes, like every other details then the Buyer fill out and send the Memo/form to the seller B, through a encrypted mode then the seller check the details If he agree then it is display to the seller click on a Button ACCEPT , The remaining work both at the Buyer and Seller End Get completed by a software called block chain technology, in an fully secured and encrypted manner.

What work Will get completed ?

I.e Once The Seller click accept button, The Technology automatically deduct the purchase value from Buyers bank account and generate Invoice and also Automatically reflect in the Ledgers of Buyer and Seller and Automatically update the Inventory details in the Both company ledgers and Update Taxes details of relevant company and also make payment of taxes immediately and also update the same details in Investor/Stake Holder or shareholder statement/Users of financial statements without any further authorisation or actions of Buyer and seller Through a Secured Code /ID through a secured channel so It doesn’t require any third party to authenticate and Certify the details of Purchases and sales and Transactions as a whole ,Third Parties means like audit and Investigations .

It is also applies to the Business loans and their timely Repayments,Taxes payments, Complainces of various laws such Medical claims, Contributions by employer to employees ect…

It can applies to whole of business trasactions, and throughout the worldwide.

(ii) Describe the current and potential uses of this technology by business

1.It Doesn’t require physical maintenance of books of accounts

2.It reduces the Reentering of data such as consolidated statements, and also reduces to Re-enter the invoice particulars, Bank payment entries by the both seller and Buyer Sides because it is automatically update through a secure Mode

3.It helps in less spending of Audit time to authenticating the documents, Balance confirmations,and ensuring the Taxes and other Regulations complainces So it helps in saving of Money and time

4.Reworking of data entry on all sides shall be reduced to 10% from 100%

5.It improves the revenue of government because of Instant Payment of taxes along with sales.

iii. Given (i) and (ii) above, what impact will this technology have on the traditional audit process?

Blockchain Technology is a new Innovative method to transact every business activity in a fair and consistent and Transparent manner , It doesn’t involve/allow any other person to unauthorizedly alter the data even the holder of the data(Buyer) unless the other party(seller) help to modify the Data

BlockChain Technology help in reducing the application of audit procedures ,I.e apply less audit procedures Such as Debtors /Creditors balances confirmations is not required , Authentication of Documents such as Invoice, Purchase ,Sales, Returns transaction, other Observations can be reduced because It is direct link from other party who is dealing with the company and The other Party is also involved in payment of regular taxes such as sales taxes which ensure the The other Party also entering the authenticate details but not any   fictitious sales because he has also involved in regular auditing and Tax compliances which is issued from time to time.