Audit is about to change – so is regulation. While regulators around the globe grapple with Blockchain technology and its implications, including tokenisation of securities, fractionalisation of assets and ICOs, others – including at least one of the co-inventors of the technology – are working on a quiet revolution they believe is destined to transform the entire landscape, From static to dynamic. From grainy quarterly or annual snapshot audits to a continuous, transparent, real-time HD ‘video’!
As leading academic John Quiggin, an economist at the University of Queensland, pointed out in a Guardian article last week regulation as we’ve known it is reaching the end of it’s road. Saying: ‘The usual defences of “bad apples” and “rogue advisers” have fallen apart as it becomes evident the problems are systemic, driven by relentless pressure from the top to maximise profits at all costs.’
He cites a 2014 study “Business culture and dishonesty in the banking industry” published in Nature which showed that “Banking has developed an ingrained culture of dishonesty” and concludes “We will probably have to wait for another crash before the power of the financial system can be tamed. But, given the incentives in the system for reckless dishonesty, that crash will come, sooner or later.”
Or could there be another way? As Jason Meyers, Founder of Auditchain said when I interviewed him recently. Who could refuse a system which is tamper-proof, so much better able to observe and report transactions in real-time, as well as offer near real time analysis – other than those who hope to gain from gaming the system?
No doubt Auditchain will be followed by others but Jason’s top team includes such luminaries as Dr. Stuart Haber, one of the co-inventors of Blockchain technology ( although cited, three times in the original Bitcoin paper, Dr. Haber has denied he is Satoshi Nakamoto), and Eric Cohen, one of the co-founders of the global standard business reporting mark-up language; XBRL.
Auditchain’s mission is continuous, transparent, real-time audit – “streaming financial statements”. If audit ‘as we know it’ is a series of grainy quarterly snapshots, then this is real-time video! Tamper proof and consensus-based – with external validation and analysis ensuring transparency and so cutting the scope for fraud.
If that’s an alternative to the inevitability and hardships of another crash, as Quiggin suggests. then who can question it? Bring it on!
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