Blockchain security risk assessment and the auditor

Abstract

A blockchain is an Internet‐based peer‐to‐peer system that forms a network of independent and connected computers that simultaneously record and verify transactions. This peer‐to‐peer system focuses on who owns the information and how that information is transferred. Blockchains offer significant advantages over traditional databases where users can delete, modify, and change records. The advantages include improved efficiencies, lower costs, enhanced transparency, and an immutable audit history of all transactions. The advantages, however, are not without significant risks. The risks include technological risks, data security risks, interoperability risks, and third‐party vendor risks. Because of the inherent advantages in blockchains, auditors are being called upon to provide assurance services to clients who use blockchains and to advise clients on blockchain technology. Therefore, auditors must be equipped with the knowledge and expertise of not only blockchain technology, but also the assessment of risks inherent in blockchain technology.

Managing change with and through blockchain in accountancy organizations: a systematic literature review

“…A significant number of these exploratory articles investigate different facets of the impact of BT on the accounting industry (Karajovic et al , 2019), the accounting profession (Desplebin et al , 2019; Kwilinski, 2019) and potential advantages and concerns (Fuller and Markelevich, 2019; Sinha, 2020). There is also a focus on areas such as risks to private and permissioned blockchains (Sheldon, 2019), security risk assessments (White et al , 2020), internal audit activities (Rooney et al , 2017) and the meaning of continuous accounting and auditing (Smith, 2018b, c) in tandem with big data and smart contracts (Vasarhelyi et al , 2015).…”

“…Of the articles analyzed, some dealt with the subject matter from all four of these viewpoints (Kiviat, 2015; Dai and Vasarhelyi, 2017; O'Leary, 2017; Karajovic et al , 2019), whereas others focused on only two – either on the positive and negative outcomes of internal origins – that is, strengths and weaknesses (Moll and Yigitbasioglu, 2019; Schmitz and Leoni, 2019; Tan and Low, 2019) – or on the positive and negative outcomes of external origins – that is, opportunities and threats (Appelbaum and Smith, 2018; Sheldon, 2019; White et al , 2020). However, most articles examined only one aspect, either the strengths of BT (Fanning and Centers, 2016; Coyne and McMickle, 2017; Kogan et al , 2017; Kozlowski, 2018; McCallig et al , 2019) or the opportunities that come with the implementation of BT (Kokina et al , 2017; Rooney et al , 2017; Rückeshäuser, 2017; O'Leary, 2018; Rozario and Vasarhelyi, 2018; Sheldon, 2018; Wang and Kogan, 2018; Wu et al , 2019).…”

“…Lastly, threats caused by external factors need to be acknowledged. First, the market itself might distrust this technology by considering it not sufficiently secure or reliable (White et al , 2020). Second, excessive control and concentration might lead to a company's controlling most of the nodes, as well as an excess of useless information (Dai and Vasarhelyi, 2017; Sheldon, 2019).…”

Cyber-Security Risk Assessment Framework for Blockchains in Smart Mobility

“…B LOCKCHAIN technology is a secure platform that maintains past records of digital events by creating an irrefutable record in a public ledger [1]- [4]. From the birth of the first blockchain system, the technology has experienced many stages of development: blockchain 1.0, blockchain 2.0, and blockchain 3.0.…”

Mathematical Analysis of Parametric Characteristics of the Consensus Algorithms Operation with the Choice of the Most Priority One for Implementation in the Financial Sphere

“…In recent years, blockchain's dispersion (variance), irreversibility, and traceability [4] have caused growing concern. Consequently, many enterprises, governments, and scientific institutions have used blockchain-based applications in various fields, such as smart contracts [5,6], the Internet of things [7,8], and security services [9,10]. As a component in the development of software systems, blockchain can offer communication services, data storage, intellectual data analysis (data mining), and computing services.…”