Blockchain-Based Assurance Systems: Opportunities and Limitations in Modern Audit Engagements

• Author(s): Oluwatosin Ilori ; Comfort Iyabode Lawal ; Solomon Christopher Friday ; Ngozi Joan Isibor ; Ezinne C. Chukwuma- Eke
• Paper ID: 1708023
• Page: 166-182
• Published Date: 31-07-2020
• Published In: Iconic Research And Engineering Journals
• Publisher: IRE Journals
• e-ISSN: 2456-8880
• Volume/Issue: Volume 4 Issue 1 July-2020

Abstract

The advent of blockchain technology has introduced transformative potential within the domain of auditing, offering a novel framework for enhancing transparency, accuracy, and stakeholder confidence. This paper explores the application of blockchain-based assurance systems in modern audit engagements, examining both the opportunities and inherent limitations of integrating distributed ledger technologies into auditing processes. Blockchain’s fundamental characteristic of immutability allows for the creation of tamper-evident records, thereby increasing the reliability of financial data and reducing the risk of fraud or manipulation. Through smart contracts and real-time transaction recording, auditors can access verifiable, chronological data trails, significantly decreasing audit lag and enabling near-instantaneous verification processes. This evolution minimizes dependence on sampling and post-facto reviews, paving the way for continuous auditing models. Moreover, blockchain’s decentralized and consensus-driven architecture fosters enhanced stakeholder trust by ensuring that audit evidence is consistent, verifiable, and transparently sourced. Clients, regulators, and investors are thus able to independently verify financial records, thereby reinforcing the credibility of audit outcomes and supporting more informed decision-making. Additionally, automation enabled by blockchain systems reduces human error, enhances data integrity, and optimizes resource efficiency during audit planning and execution. Despite these advantages, several limitations challenge the widespread adoption of blockchain in auditing. Key concerns include interoperability with legacy accounting systems, lack of standardized regulatory frameworks, scalability constraints, and data privacy issues, particularly in permissionless blockchains. Furthermore, the technology's complexity necessitates a steep learning curve for audit professionals and demands substantial initial investment in infrastructure and expertise. These challenges pose significant barriers to seamless integration and may limit blockchain’s applicability to specific audit environments. In conclusion, while blockchain-based assurance systems hold immense promise for revolutionizing the auditing landscape by delivering real-time, trustworthy, and immutable records, their successful implementation requires overcoming technical, regulatory, and organizational hurdles. Future research should focus on developing hybrid audit models, enhancing auditor competency in blockchain technologies, and establishing global standards to guide blockchain audit practices.

Keywords

Blockchain, Audit Reliability, Immutable Records, Stakeholder Trust, Real-Time Auditing, Smart Contracts, Continuous Assurance, Decentralized Systems, Audit Transparency, Data Integrity.

Citations

IRE Journals:
Oluwatosin Ilori , Comfort Iyabode Lawal , Solomon Christopher Friday , Ngozi Joan Isibor , Ezinne C. Chukwuma- Eke "Blockchain-Based Assurance Systems: Opportunities and Limitations in Modern Audit Engagements" Iconic Research And Engineering Journals Volume 4 Issue 1 2020 Page 166-182

IEEE:
Oluwatosin Ilori , Comfort Iyabode Lawal , Solomon Christopher Friday , Ngozi Joan Isibor , Ezinne C. Chukwuma- Eke "Blockchain-Based Assurance Systems: Opportunities and Limitations in Modern Audit Engagements" Iconic Research And Engineering Journals, 4(1)