Road ahead & role of

BLOCKCHAIN CHARTERED ACCOUNTANTS

 # Developing Accounting system using distributed ledger

# Developing Assurance Service for Blockchain Technology

Let’s discuss
# Governance, Risk, Security / Control & Compliance Issues

# Opportunities ahead for CA : Skill for future

Developing accounting system using
Distributed Ledger Technology
 Developing Accounting Systems using Distributed Ledger

Peer to Peer Time Stamped Continuous & complete

Interoperability Consensus Reporting Built In

 Developing Accounting Systems using Distributed Ledger

“Blockchain Is nothing but a special styled accounting methodology only”

Peer to Peer Time Stamped

# No Central Authority # Proof of Work
# Forced Honesty # Hash Algorithm
# Democratic Decision Making # Immutable
 Developing Accounting Systems using Distributed Ledger

Continuous & Complete

# Full Node
# Transactional Trails
# Multiple Single Entry
# Permanent
# SMART CONTRACT

Double Entry Accounting – 15th Century – Lucas Pacioli

 Developing Accounting Systems using Distributed Ledger

Consensus Mechanism

# Proof of Work
# Proof of Stake
# Reward of consensus

# 51% attack
 Developing Accounting Systems using Distributed Ledger

Interoperability
# Communication with other Blockchains
# Comparisons of results
# Inter-depencies for meaningful interpretations

Built in Report
# Financial Reporting
# Economic Interpretations
# Regulatory Compliance
Developing Assurance Service for
Blockchain Technology
 Developing Assurance Service for Blockchain Technology

Immutability Assurance Tests Smart Contract Cyber Risks

# Hash algorithm # Sample Testing # Self Executing # Anonymous

# 10 Minutes # Real Time # Monitored # DDos
# Continuous Assessment # Rule of Code # Professional Judgement # Standardization
 Developing Assurance Service for Blockchain Technology

Immutability

Hash Algorithm 10 Minutes Continuous Assessment

# SHA 256 Data Storage # Slow for Developers # Year End

# Analytical Procedures # Fast for Auditors # Reconcile Transactions

 Developing Assurance Service for Blockchain Technology

Assurance Tests

Sample Testing Real Time Rule of Code

# Entire Database # Irreversible # Codanalysis

# No Loss of Data
# Lack of Audit Trail for # Source Code Audit
Upgrade in analytical anonymous but valid
procedure methodology Transaction # Self Executing
 Developing Assurance Service for Blockchain Technology

Smart Contract

“Executed exactly as programmed without any

possibility of downtime, censorship, fraud or third
party interference”

# Professional Judgement?
 Developing Assurance Service for Blockchain Technology

Cyber Risk (market size $ 200b by 2021)

# Distributed Denial of Service (DDoS)

# No International Regulatory Body yet

#Anonymous Valid Transactions

Governance, Risk, Security / Control &
Compliance Issues
 Governance, Risk, Security / Control & Compliance Issues

Governance Risk
# Code is not Law # Assessment

# Currently Self Governance # Undetected Transactions

Security Compliance
# 51% attack # Industry norms yet to be defined

# Developing strategies for controls # International precedence

 Governance, Risk, Security / Control & Compliance Issues

Governance

# Rule of Code vs Rule of Law

# Code = Law ?

# Code : Complete Law ?

# Currently Self Regulated

# Creating Governance mechanism

# Creating Legal framework

 Governance, Risk, Security / Control & Compliance Issues

Risk
# Assessment & Mitigation

# Undetected Trade – Lack of reporting / compliance.

Security
# Developing strategies for control & industry best disclosure

# Cross border trade

 Governance, Risk, Security / Control & Compliance Issues

Compliance : Global Compliance : India Opportunities

# International Precedence
# Border less trade # Skilled Jobs

# Conflicting Laws # Public Private Partnerships

# Self Audit Systems

# International Body
# Question Centralization ?
# International Laws
Opportunities ahead for CA :
Skill for future
 Opportunities ahead for CA : Skill for future

“Successful accountants will be those who work on assessing the real economic
interpretation of Blockchain records, marrying the record to economic reality and valuation”

Global India

# Market Size $ 8b by 2024 # Tech heavy Country – Blockchain development jobs

# Borderless Transactions / Trade # Service Market from India

# Specialized accounting / audit # Traditionally democratic

 Opportunities ahead for CA : Skill for future

# 61.5% CAGR by 2024

# WEF (2016, 2017) more than 30 governments and 90

central banks are currently investing in blockchain

# Global Blockchain Professional

# Integration of international compliance
 Opportunities ahead for CA : Skill for future

Disrupting Industries :

Trade settlement, Trade Finance, Regulatory Reporting, Digital Identity,

Customer onboarding, Land Registry, Supply Chain, Loyalty Programs & more

# Re learn audit analytical procedures

# Upgrade tech skills for global competitiveness

 # Scalability ( Sharding – Test Check)

CHALLENGES # Privacy anonymous

# Governance & Regulation

# Cyber Security

# Nascent
 Key Takeaways
# Cultural change from centralized to decentralized
# Disruptive changes in audit methodologies
# Upgrade skill to understand / audit self executing smart contracts
# International exposure and compliance
# $ 8b market 2024 with CAGR 61.5% with service jobs

Thank You !

Varun Sethi
varun@blockchainlawyer.in