Decentralized Continuous Audit & Reporting Protocol Ecosystem™

tharindualwis (28)in #audt • 5 years ago

Using a distributed ledger smart contract network with a node layer that captures, and validates a straight through accounting treatment (“STAT”) and reporting of enterprise transaction data along with a second node layer that independently and continuously audits and certifies every data block pursuant to SSAE 18(12) and IASE 3402(13) standards can theoretically substantiate the reduction of the time lag, conditionality and subjectivity of enterprise data reporting and financial statement presentation. This process would provide a substantial value proposition for issuers of tokens and securities as well as investors and regulators. Such a process theoretically becomes the basis of a decentralized continuous audit and reporting protocol ecosystem (“DCARPE™”) suitable as an infrastructure for networks of enterprises as well as constellations of other network ecosystems.

Solution

Auditchain proposes to embody an ecosystem that includes a blockchain protocol and an open source library of accounting smart contracts sufficient to capture, process, audit and report enterprise data and performance data on a real time continuous basis under a continuous independent audit exceeding current accounting, audit and control standards. A public facing and/or permission based presentation layer proposes to render in real time, at the close of every block; balance sheet, income statement, cash flow and statement of changes in stockholders’ equity reports that has the capacity to far exceed the reliability of existing reporting standards.
Decentralized Continuous Audit and Reporting Protocol Ecosystem “DCARPE™”
Continuous audit is evolving in theory and practice. Its practice is limited mainly to internal reporting controls. The application of jurisdictionally compliant accounting treatment to transactions and reporting system risk controls occurring in most business processes is now theoretically possible concurrently within and subject to a decentralized continuous audit environment pursuant to SSAE 18(12) and IASE 3402 standards through the use of configurable “Ricardian” type smart contracts(6)(7).

Technology Stack
Auditchain supports a full stack which includes the base protocol layer, GAAP, IFRS and GAAS smart contract layer, application layer, audit node layer and real time (per block) public facing or permission based financial statement, audit analytics and statistical reporting presentation layer

Transaction Lifecycle
Public facing and/or permission based financial statements are impacted by every enterprise transaction and are validated with straight through accounting treatment (STAT) resulting in books and records that are considered as audited in real time.
Every business contract and transaction is processed through the appropriate accounting treatment contract and written to the general ledger. Additionally, each transaction as well as accounting and tax treatment data is hashed and timestamped as the third entry to the blockchain. The total STAT impact of every transaction is applied and pushed out to the P & L, balance sheet, cash fow and statement of changes in stockholder equity.

Regulatory Compliance and Use Case for Enterprise and Government
Publicly traded enterprises rely on centralized accounting, internal audit and reporting data processing systems to manage, measure and report the throughput of performance. Quarterly and annual reports are compiled and required to be fled with the Securities Exchange Commission. Additionally, audits are also required to be performed for many types of enterprises including governments. Auditchain proposes to automate and decentralize accounting, audit and reporting throughput while substantially reducing the cost of compliance for: