2019 AfricaCACS - Auditing Smart Contracts

August 27, 2019

 

Smart contracts enable automated execution of agreements, rights, and obligations in digital form between two of more parties using tamper-proof execution of computer code. By providing standardization, speed, security, and certainty to transaction settlement, smart contracts are posed for rapid adoption as organizations seek to reduce transaction costs by adopting blockchain technology. Accordingly, smart contracts bring forth new pitfalls and prerequisites to the auditing process for the auditors not previously seen.

 

Smart contracts enable automated execution of agreements, rights, and obligations in digital form between two of more parties using tamper-proof execution of computer code. By providing standardization, speed, security, and certainty to transaction settlement, smart contracts are posed for rapid adoption as organizations seek to reduce transaction costs by adopting blockchain technology.One prevailing argument is that the combination of smart contract with blockchain technology reduce or eliminate the demand for audits as the underlying technology is both self-enforcing and verifiable to ensure data accuracy and integrity. However, the reality could not be further from the truth. In the blockchain era, auditors need additional skills beyond preparing and examining records, and attesting that internal control processes are working properly. In other words, auditors must be able to read and understand smart contract codes, and to relate the codes to the organization's internal control processes.

 

Tuan Phan took front-center and presented the various techniques and methods to audit smart contracts at ISACA 2019 AfricaCACS. This session provided the attendees with key understanding of the fundamental concepts behind smart contracts, the legality, the risks relating to their use, and how that may impact audit activities. The session also yielded the launchpad from which auditors can better prepare to carry out audits of smart contracts as more organizations seek to adopt the use of blockchain technology to support their solutions and service offerings to their customers.

 

Tuan Phan presented the various auditing techniques and methods to consider in auditing smart contracts at ISACA 2019 AfricaCACS. His presentation can be obtained from this link.

 

Highlights from the session are below:

 

 

 

 

 

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