Blockchain-based audit tools can revolutionize audit assurance model: SEC Commissioner

Blockchain-based audit tools can revolutionize audit assurance model, an official at the U.S. Securities and Exchange Commission (SEC) said recently.

Speaking at the Council of Institutional Investors 2018 Fall Conference, SEC Commissioner Kara M. Stein discussed the importance of improving information for investors in the digital age.

“Our society, and our capital markets, are not just evolving, they are transforming before our eyes. Digital technologies offer new ways to more efficiently and effectively solve complex problems,” Stein said.

She further emphasized the SEC should focus on how to organize the information and ensure that it is fairly presented. Stein added that the regulator’s mere “guidance” regarding cyber-related disclosures is not sufficient to provide useful and reliable disclosure and leaves “companies in a state of quandary.”

Further highlighting the importance of the role of auditors in protecting public interest, Stein noted that their “central communications tool, the auditor’s report, has remained largely unchanged.” While changes have been made to audit standards across the globe, she emphasized that “more needs to be done.”

“The Digital Age presents that opportunity. The development of audit tools that leverage data and technology, including blockchain, could revolutionize the audit assurance model. This means that auditors could benchmark corporate data and expand their assurance beyond the financial statements,” Stein added.

In March 2018, the American Institute of CPAs (AICPA) released a white paper on the implications of blockchain technology for audit and assurance. In July, auditing giants – Deloitte, EY, KPMG and PwC – joined 20 Taiwanese banks to trial a blockchain service for auditing public companies' interim financial reports.