KNOW ABOUT AUDITING
Auditing is a process of examining the financial records and transactions to be claimed as genuine. The purpose of auditing is to provide independent judgment on the financial statements of the audited system or organization. Auditing is an important process for financial grounds. The types of audits are as follows; external audits, internal audits, and internal revenue service audit.
The external audit process confirms the organization’s internal controls, guidelines, and adequate policies; governmental requirements as per the industry level, and company norms. It also ensures the financial statements by reporting mechanisms for error prevention. Currently, internal audits are looking at risk management, governance, and ensuring the effectiveness of internal operations.
The IRS (Internal Revenue Service) audits are there to handle the accounts and financial information of the organization. They confirm the originality of reported information according to the tax law including the tax amount verification.
Audit engagement is one of the most important requirements that ensure the communication and acknowledgment of responsibilities. It’s been always a challenge drafting a proper engagement letter depending on the accounting standard.
The process of ensuring the originality of documents like; invoices, and sales are the most complicated and tough job that has been proven to be weak enough sometimes. The crucial process needs non-interruptive verification to get a quick result to support the assertions.
Sometimes the auditors and the internal controllers say the management is responsible for inviting fraud and duplicity by avoiding them as they lack proof. A strict approach should be taken to any inappropriate or unwanted activity. But somehow the process starts fading away with time.
The written presentations do not have enough exact audit evidence. It can only support the audit shreds of evidence where the written depictions are necessary not in every section.
SOLUTIONS WITH BLOCKCHAIN TECHNOLOGY FOR BANKING
There are some blockchain applications are available for external audits that will allow the visibility of every financial status of the transaction on the system to improve the way of audit working strategy.
The combination of blockchain and data analytics will help to accelerate the auditors’ skills to provide standardized data. With the help of blockchain technology, the auditing can not only see the transactions and monetary amounts but, also explore the details like; is the transaction is credit cash or cost of sales outflow and expenses, is making an asset or paying creditors. The presence of blockchain will help the auditors to indulge themselves in those judgmental questions without any worry.
The transparent digital ledger system of blockchain omits the entry or error or non-verified data to avoid any unnecessary fraud invitation and to provide standard data.
As the whole blockchain system is secure for data storage and transfer, the input data become protected and tamper-proof. The linked authorities can access and upload the data through private nodes to maintain privacy.