Welcome to UPACA

Understanding ABCD-Demystifying Technologies  

Block chain

A block chain, is a growing list of records, called blocks, which are linked using cryptography. Each block contains a cryptographic hash of the previous block, a timestamp, and transaction data. By design, a block chain is resistant to modification of the data. It is "an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way". For use as a distributed ledger, a blockchain is typically managed by a peer-to-peer network collectively adhering to a protocol for inter-node communication and validating new blocks. Once recorded, the data in any given block cannot be altered retroactively without alteration of all subsequent blocks, which requires consensus of the network majority.

Block chain enables to get all the related parties in the ecosystem   on to the network thereby ensuring the following:

  • Duplication of capturing data  is avoided
  • Transaction cost are reduced given intermediaries are eliminated
  • The data in the distributed and all the parties in the Block chain are accessing the single version of truth
  • Block chain eliminates reconciliations, since all the parties are accessing the same data


Block chain can be a private block chain( restricted) or a Public Block chain accessible to all

The typical Business use cases of a Block chain would be in cross Border inter-Bank payments LC transactions , Stock exchange trading where multiple parties are involved. Bitcoin uses block chain technology and is not the same as block chain, although at times interchangeably used.

Impact to Chartered Accountants

  • Procedures adopted for conducting audits  will have to be relooked at
    • Sampling
    • Reconciliation,
    • Timing of procedures i.e Real-time Analysis of data/Real time reporting of data.
  • Methodology adopted for testing the  Audit Financial Assertions will change
  • Accounting ledgers can also be on the Block, and the concept of “”immutability”” will help in “True and Fair Assertions””
  • Legal  agreements will be based on “Smart contracts”, which uses block chain technology


Opportunities for Chartered Accountants

  • Providing Business Expertise to Block chain implementations as a Business process expert and helping eliminate unnecessary processes through automation.
  • Assurance services like risk assessment  for new Block chain implementations
  • Conducting technology audits on Block chain implementations/Block chain enabled processes.