Research on Blockchain Data Auditing Methods in Financial Auditing: Audit Process Optimization Based on Smart Contracts, Consensus Mechanism and Privacy Protection Technology

Abstract

This conference paper aims at understanding how blockchain technology can be utilized in financial auditing in relation to smart contract, consensus, and privacy-preserving technology. The paper focuses on how Deloitte and Santander Bank incorporate blockchain for auditing, especially filing compliance verification, data integrity, and privacy concerns, by employing a qualitative, multiple-case research study. Proof of consensus such as Proof of Authority (PoA) and the Practical Byzantine Fault Tolerance (PBFT) guarantee that the records of the blocks are unaltered since they involve a consensus on the validity of a particular transaction in a distributed fashion. Furthermore, solutions like Zero-Knowledge Proofs (ZKPs), and homomorphic encryption enable the auditors to confirm transaction legitimacy without compromising the customers' data privacy laws. Research evidence suggests that blockchain has the potential to improve efficiency, integrity, and security rate in financial audit but major issues that hinder its widespread application include high cost, lack of acceptance by authorities, and technical issues. The paper provides solid suggestions regarding the adoption of blockchain in auditing and provides suggestions for the future research to explore more about the efficiencies of the audit that can be obtained with the implementation of blockchain and the regulatory policies that could make blockchain more suitable for the various industries.