An Examination of Design Choices Intended to Improve the Auditability of a Consortium Blockchain

Abstract

ABSTRACT Blockchain consortia offer firms several advantages, including the ability to maintain a shared transaction ledger that is secure, verified, and agreed-upon by key business partners. While these benefits are largely derived from blockchain’s distributed architecture, this same architecture poses challenges to auditors working to provide assurance on a technology owned, operated, and maintained across several firms’ borders. Indeed, participating in a blockchain consortium transitions a firm from relying solely on its own IT infrastructure and processes, to being vulnerable to how other firms collectively maintain the shared ledger. As blockchain consortia grow and are used to process and record material transactions, members will require assurance that other members maintain the blockchain in a well-controlled manner. Given the complexities of auditing a distributed environment, this study proposes three design choices intended to improve the auditability of consortium blockchains. Practitioners then evaluate these designs and offer additional considerations/alternative paths forward.