The audit implications and considerations of DLT-centric entities

Abstract

Purpose: The dissertation aims to analyse any special implications and considerations arising during the audit process of Distributed Ledger Technology (DLT)-centric entities, whether perceived or in actuality. The dissertation has within its scope two (2) objectives; to analyse the differences and, thus, the implications and considerations in the audit process of DLT-centric entities versus non-DLT-centric entities, and to analyse other differences, comments and perceptions relating to the auditing of DLT-centric entities, while also referring to available literature, where possible. Design: The primary data were obtained by conducting five (5) detailed semi-structured interviews with representatives of the ‘Big four’ auditing companies, medium-tier audit entities and the governing authority. In designing the interview guide, previous literature was considered to ensure relevant findings and a valid discussion exercise. Findings: The main findings emanating from the primary data collection were sufficient to cover the stated objectives of the study. The main findings confirmed that DLT-centric entities share special implications and considerations, however, these are likely to contrast with the considerations highlighted in available literature. Another significant finding of this study related to the Maltese environment and the significant implications of the Maltese regulatory regime, and decisions taken by the governing authority. Furthermore, the dissertation also notes an interesting finding considering the human resource issues in auditing DLT-centric entities, which have been exacerbated locally by a human supply crunch and Malta’s greylisting by the Financial Action Task Force (FATF). Conclusion: It was thus concluded that several special considerations and important implications exist when auditing DLT-centric entities. A further conclusion was drawn on the main findings of the study and the lack of capture of some of the salient findings in prior literature, which also highlight that the current literature review, still in its embryonic stages, has a lot of scope for further development, in line with the technology itself. This study thus concludes by being a first instance study in the cross-functional and professional world of DLT and accountancy/audit. Value: Given the exponential growth of DLT, a dissertation is needed to identify the possible implications and considerations which are likely to pose special interest in the audit of DLT-centric entities. This dissertation shall serve as an initial study in this field both in Malta and outside it.