۱٫ Introduction

۲٫ IT architecture

۳٫ The proposed blockchain architecture and design considerations

۴٫ Conclusion

References

Abstract

Blockchain technology has garnered the interest of the accounting profession in recent years. However, when considering whether to adopt this technology, many business professionals have voiced a lack of a compelling use case as a major challenge. To utilize the technology effectively, first, we need to establish how organizations will connect to the blockchain that will also provide a compelling use-case for CPA firms. In this paper, we design a blockchain architecture for organizations that will facilitate effective connectivity to a blockchain while enabling auditors to leverage this technology to provide audit and assurance services. To design the architecture, we consider two broad questions: first, how do CPA firms gain access to reliable audit evidence and, second, how can client firms maintain confidentiality and security of their data given a decentralized and distributed immutable ledger (i.e., a blockchain). Consequently, the proposed architecture will help auditors gain access to reliable digital audit evidence while incentivizing client firms to adopt blockchain technology by substantially reducing the costs of replacing existing information systems. Given this architecture, auditors could also design continuous audit procedures for their respective clients without having to incur substantial investments in software integration. Further, the architecture can be expanded to include various use cases and supply chain participants, other CPA firms, customers, and regulators.

Introduction

Blockchain technology is an important information technology trend that has been closely examined by the accounting profession during recent years. The American Institute of Certified Public Accountants (AICPA) published at least eight press releases about blockchain technology in 2018. The topics of interest included tax reform, implications for audit and assurance, strategic directions, and research opportunities. Further, an AICPA press release mentions that the emergence of blockchain is “widely seen as having significant implications for the evolution of financial audits and other complex processes that require verification and confirmation” (AICPA, 2018b). A global blockchain survey conducted by Deloitte in 2018 indicates that 74% of respondents already participate or would likely participate in a blockchain consortium in the near future (Deloitte, 2018). Further, experts are convinced that firms should at least stay up to date on blockchain development and that doing nothing would be a mistake (Deloitte, 2018). Despite such widespread interest, 21% of global respondents and 30% of US respondents say that there is as yet a lack of a compelling use-case to justify blockchain implementation.