Blockchain Audits

This case study on digital assets introduces students to the foundational principles of blockchain technology, digital asset management, and the role of analytics in auditing digital transactions. Through structured tasks, students will explore the classification, valuation, and risks associated with cryptocurrencies under US GAAP, particularly focusing on audit challenges posed by blockchain. Using tools like the EY Helix Blockchain Analyzer, students simulate real-world audit scenarios, including reconciling cryptocurrency transactions, verifying asset ownership, and ensuring data completeness. This case provides hands-on experience with analytics tools and enhances students’ understanding of the evolving digital assets ecosystem.

Why is this important?

As digital assets gain prominence in the financial sector, understanding blockchain’s decentralized ledger technology and the intricacies of digital asset management is crucial for future auditors. This case highlights the relevance of analytic methods in managing audit risks unique to digital transactions. By examining the role of tools like the EY Helix Blockchain Analyzer, students develop essential skills in transaction validation and risk assessment, preparing them to address the emerging challenges of auditing in the digital age. The experience reinforces the importance of consistency in accounting and auditing standards as organizations increasingly interact with digital assets and blockchain technology.

Materials:

Case: Analytics Mindset Digital Assets Background and Case.
Case: Cloud-Based EY Helix Blockchain Analyzer for Students Interface Case Resource.
Slides: will be available for download by the beginning of class in either powerpoint or pdf formats.
Data: A data update may be required for this class. To ensure your files are the most up-to-date, navigate to ACCTG521_Labs folder and run the command git pull.
Analytics Tools: EY Helix Blockchain Analyzer for Students (using TIBCO Spotfire).

Review and Extension:

Prior classes have been focused on elements of the traditional integrated audit model with a focus on transaction analysis and internal control testing. In this class we begin a new module which aims to explore emerging technologies and their implications for audit, assurance, and compliance. Through a series of guest speakers and targeted analytics, students will examine various topics including audit challenges associated with digital assets on public ledgers, governance issues with generative AI, and compliance related to AI and cybersecurity issues. Each class within the module delves into one of these domains, building a comprehensive skill set for assessing compliance risks, ensuring data integrity, and addressing security vulnerabilities. These innovations are reshaping audit standards and methodologies, laying the groundwork for future-focused audit practices that are responsive to evolving technological landscapes.

Preparation:

1. There is no required preparation, but if you read the case in advance, consider the following:
2. Part 1 of the case provides background material on Blockchain technology, it will be covered only briefly and at a high-level.
3. Part 2 relates to accounting for and auditing digital assets, the audit part is useful background, but we will not touch on the accounting treatment in this class.
4. Part 3 is a reference for the first part of the lab exercise we will work on in class.
5. Part 4 provides background on how to use the dashboard associated with this case, it provides a useful background reading or can serve as a reference in class, or both.
6. Part 5 section 1 will not be covered, but sections 2 and 3 will be covered in detail and together with part 3, will be used in the practice deliverable for this module.

Class Plan:

Teams: during this class, please sit in your discussion teams.

1. After a brief review, we will discuss blockchain technology and public ledgers from an audit perspective.
2. The first lab will focus on Part 3, which can be done on your device or the remote labs (the table of transactions discussed in the case can be downloaded using this excel spreadsheet).
3. The second lab will focus on Part 5 (sections 2 and 3) of the case, using the Cloud-Based TIBCO Spotfire: EY Helix Blockchain Analyzer for Students, which can also be accessed on your device or the remote labs.
4. At the end of class, I will ask for a brief deliverable relating to this material which will be submitted to Canvas.