"How the use of Blockchain is changing

the role of Internal Auditors"?

Group II
Abhirup Kar (200101004)
Aman Baghel (200101023)
Ankita Agarwal (200101030)
Rishabh Bathija (200102047)
Sparssh Lakhotia (200101149)
 WHAT IS BLOCKCHAIN ?

• Blockchain is:
• A public database
• Distributed Storage
• Stores Records in Blocks
• Consensus Mechanism
• Types of Blockchain:
• Permissionless
• Permissioned
• Benefits of Blockchain for auditors:
• Openness and Transparency
• Immutable
• Analytics
• Automated Contracts
• Real-time Data
• Smart Contracts:
• Automated Triggers when certain conditions are met
• Mostly used for automated transactions
• Removes the need for trust
• Disintermediation
BLOCKCHAIN REPRESENTATION
 ADOPTION OF BLOCKCHAIN IN INDUSTRIES

Deloitte 2021 Global Blockchain Survey of FSI Professionals

OpenLedger Blockchain Use Cases Group

• Due to the versatility of the Blockchain protocol, use cases have been
developed across many industry verticals like • Key topics that have been critical for defining and creating transparency and
• Financial Services accountability within organizations are:
• Supply Chain and Logistics • Permissionless Blockchain
• Power Distribution and Utility • Permissioned Blockchain
• Smart Cities Planning Departments • Interoperability
 IMPACT OF BLOCKCHAIN IN THE ROLE OF AUDITING
Disrupting Financial Statement Auditing
• Open access to population data vs. random sampling
• Automated real-time flagging fraudulent transactions
• Detailed Analytics and Dashboards

Auditing Digital Transactions in Blockchain Network:

Based on how the business processes are designed, financial transactions can still be:
 Fraudulent
 Between related parties
 Linked to agreements that are not part of the Digital Contracts
 Incorrect
Auditing Smart Contracts:
• Smart Contracts don’t allow for contingent future scenarios
• Or may simply contain coding errors
• Auditors will need new skills to audit smart contracts and digital transactions

Consortium Contributions:
• Industry Leaders
• Government Bodies and Regulators
• Use Cases in Industries and Implementation Specifics
• Auditor’s role in Consortium:
• Staying up to date
• Use Expertise to influence decision making
 BLOCKCHAIN RISK MANAGEMENT
How Blockchain reduces Risks
• Transparency
• Robust Governance
• Immutability

Risk inherent to the Blockchain Network

• 51% Attack:
• This is when hacker gets access to 51% of the network
computational power
• Especially vulnerable for Permissioned Blockchains
• Smart Contracts:
• Self-executing Codes within the network
• Hackers can inject malicious code in the contract
• Most hackers have targeted smart contracts for vulnerabilities

• Other standard risk considerations are:

• Strategic
• Business Continuity
• Reputational Risk
• Information Security Risk
• Regulatory Risk
• Operational and IT Risk
• Contractual Risk
• Supplier Risk
THANK YOU