With regulators around the world scrambling to get to grips with Blockchain tech could the technology itself, and continuous audit, be part of the answer?
When I spoke to Auditchain™ founder Jason Meyers this week, it felt a little like talking to blockchain royalty – at once removed anyhow
Jason’s top team includes such luminaries as Dr.Stuart Haber, one of the co-inventors of Blockchain technology, who although cited three time by him denies he is Satoshi Nakamoto (but sometimes gets called that around the office); and Eric Coen, one of the creators of the business mark-up language XBRL
The Auditchain™ mission is continuous, transparent, real-time audit. If audit ‘as we know it’ is a snapshot, then this is a video! Tamper proof and consensus-based - external validation and analysis ensuring transparency and so cutting the scope for fraud.
After more than twenty years in investment banking and high level auditing systems, Jason set up a successful investment bank and raised capital at the time of the 2007/8 financial crisis –a great time to do so, with people who would normally be completely unavailable suddenly looking for work, and at reasonable price.
The company ran a multi-jurisdiction platform allowing transparency for all departments on transactions from end-to-end. Facebook was a major and happy customer.
But after a conflict over accounting with FINRA during when even 100% transparent, forensic audit couldn’t appease the regulator Jason realised it wasn’t about the audit... and stepped away from the industry altogether to rethink his future. During this break, in around 2013, he did a huge amount of reading about Bitcoin and blockchain, and a lot of thinking about its potential use in audit.
He especially went deep into the science behind blockchain, to work out how the biggest transactions could avoid being hacked.
Jason’s ‘aha!’ moment came when he realised he was part of a rare breed of people who understand both the technology behind blockchain, and the workings of monetary systems.
The revelation was profound!
He began to write a paper about creating a decentralised continuous audit and reporting protocol ecosystem. And he realised that the more you explain such a thing to others, the more you understand it yourself. The more you can tailor your message, you sharpen your understanding. As we often say... you can’t keep a thing unless you give it away!
The aim of Auditchain™ is to crowdsource enterprise dataset validation, in much the same way as any transaction in Bitcoin is validated by hundreds of external validators. It becomes part of that blockchain and is immutable.
Change in the auditing landscape and efficiency in the assurance world are inevitable, bringing changes the role of auditor. The biggest issue is always independence. But a consensus-based external validation of system control and financial statements will make transparency king - and cut the scope for fraud.