Technology will be a major focus at the Institute of Chartered Accountants of India as it not only disrupts but will also create opportunities.
Considered to be one of the safest and most secure information-recording and financial transaction mechanisms today, blockchain technology will now become part of the Institute of Chartered Accountants of India (ICAI). The Chartered accountants' apex body ICAI has announced its decision to explore the use of blockchain technology in auditing.
"Artificial intelligence and blockchain technology will be the focus among the emerging technologies. We will explore how blockchain can be used in auditing," new president Debashis Mitra told,
Technology will be a major focus of the Institute of Chartered Accountants of India (ICAI) as it not only disrupts but will also create opportunities, Mitra said.
Blockchain technology is the concept behind the running of the blockchain – a blockchain is an unchangeable, distributed digital ledger. The transactions or records on the ledger which are stored individually referred to as a “block" and the information in a block is usually linked to the information in a previous block. This, over time, forms a chain of transactions, which is what the word blockchain refers.
Mitra said the ICAI's decision to mandate a peer review mechanism for certain categories of firms rendering assurance services to specific classes of entities will go a long way in enhancing the audit quality.
The implementation will begin in a phased manner from April 1 with practice units that have undertaken a statutory audit of enterprises, having equity or debt securities listed in India. Over the next three years, the rollout would steadily cover firms providing assurance services to unlisted companies.
Additionally, Mitra has said the institute's recently-launched Audit Quality Maturity Model –Version 1.0 (AQMM v1.0) will help sole proprietors and audit firms to self-evaluate their current level of audit maturity, identify areas where competencies are lacking and develop a roadmap for achieving a higher level of maturity.
"ICAI is committed to being a partner in achieving the UN Sustainable Development Goals (SDGs) 2030 Agenda and strengthen the sustainability reporting ecosystem in the country.
Main Advantages of Blockchain:
To provide you with the benefits of blockchain technology, we will focus on public blockchains, first and foremost.
Decentralized Structure:
As we previously mentioned, decentralization is the core element of all blockchains. Without a single governing body, all the assets are created following a consensus algorithm, which is usually open-source and available for audit by anyone. This also gives the ability to the users to transact directly with each other and retain full ownership of their assets.
Improved Security and Privacy:
The decentralized nature of blockchains gives them additional security. Because the ledger is distributed to thousands of different participants, hackers are unable to exploit a single point of failure. Moreover, the cryptography is virtually unhackable, and assets in a wallet cannot be compromised unless there’s a user error.
Additionally, while entirely transparent, the distributed ledger is also pseudonymous. This means that transactions aren’t linked to the user’s identity, providing additional privacy.
Reduced Costs:
Another benefit of blockchain transactions is their reduced cost, especially when compared with traditional financial transactions via banks. This makes them incredibly versatile for international money transfers, as their borderless nature doesn’t incur any additional conversion fees.
Visibility and Traceability:
The blockchain ledger is entirely transparent and free for anyone to review. A single transaction can be traced back to its origin, and users can investigate its source. This is incredibly useful in situations where tracking is essential, such as the logistics industry.
Blockchain in Action: Use Cases;
Thanks to the implementation of smart contracts, blockchain has gained hundreds of use cases over the years. These decentralized applications can be used to automate the blockchain and represent anything of value through tokenized assets. Below are some of the most common examples.
Government:
Governments can use blockchain technology to eliminate corruption by increasing transparency in the administrative process. Moreover, it creates a trustless environment, where users can easily access relevant information. Blockchain can make elections more transparent and eliminate any kind of doubt regarding their outcome.
Banking and Financial Services:
Through the rise of decentralized finance, we have seen blockchain revolutionize the financial system as we know it. Today, individuals can rely on smart contracts to access advanced financial instruments such as lending or accessing a line of credit. Moreover, smart contracts can act as an impartial intermediary between peers for borrowing assets. People without access to a solid banking infrastructure can finally take part in the global economy.
Supply Chain:
One of the major applications of blockchain is in the logistics sector. Blockchain’s permissionless nature can offer an easy on-and-off ramp for new actors in the supply chain. Moreover, it provides full traceability of the products in the chain, allowing to completely eliminate the always-growing problem of counterfeit items. It also allows consumers to access the product’s origin, which makes it easy to incentivize the fair market.
Conclusion:
Blockchain technology was made popular by cryptocurrencies but is gaining traction in other industries as well. In the past couple of years, this tech has managed to disrupt finances by providing a real alternative to our aging, flawed financial system. And this is just the beginning. We are bound to see blockchain increase its presence in other industrial sectors and become the driving force of the upcoming metaverse everyone is talking about.
You must be logged in to post a comment.