The advent of blockchain technology will have a significant impact on the way SMSF audits are processed in the future as auditors will be assessing these transactions instead of documents.
“I don’t know if anyone has clients who have bitcoins in their SMSFs, but the technology that underpins bitcoins is blockchain and that’s possibly where we’re going to see – not tomorrow, not next year, but in several years – some changes for the SMSF audit,” SuperAuditors director Shelley Banton told the SMSF Association New South Wales chapter breakfast in Sydney last week.
“The way that blockchain technology works is that it’s basically an electronic ledger of digital events, so you’ve got a series of transactions that are happening electronically and that’s a data record that’s attached to each of those transactions.
“As the ledger grows, those data records or blocks of data, the chain keeps getting bigger and bigger.
“[Blockchain technology can] transfer value, there’s no central authority or third-party intermediary, which is actually verifying this particular transaction, and thirdly, it creates its own sense of trust so each party in the transaction has to trust the previous party in order to accept that transaction and grow the blockchain.”
Banton revealed banks were heavily investing in blockchain technology to determine how they could employ those transactions more easily, seamlessly and efficiently, as well as to reduce transaction costs and cut processing time.
“So it could well be that the impact of blockchain technology on SMSF audit in terms of our clients buying and selling investments, we might not necessarily be looking at documents in years to come, we’ll be sitting here auditing blockchain transactions as they come through,” she said.
“You’re not getting to real-time audit, but it’s a different sort of technology that requires a different sort of audit altogether.”
She said for auditors, blockchain was an exciting and innovative possibility.
“It may be something that we have to think about sooner rather than later,” she said.
“We shouldn’t be closing our minds to it because I think the possibilities in terms of how it could transform our capital markets will be quite amazing.”