Improving Internal Control Over Fixed Assets with BLOCKCHAIN

Abstract

A well-developed system of internal control, with policies and procedures that ensure the authenticity and integrity of assets, is crucial for the prevention of fraud. Fixed assets, which often constitute a large percentage of a company’s assets, can be very vulnerable to fraudulent authorization, recording, and theft. A well-designed fixed asset management system should have internal controls in place that increase the reliability of fixed asset accounting and protect against fraudulent financial reporting and theft. Blockchain technology, with its built-in system of transparency, validation and immutability, can be utilized as an effective tool in improving internal control systems within a fixed asset context. This article explains the fundamental principles of blockchain and describes how blockchain can be used to protect fixed assets against erroneous or fraudulent acquisition, recording, and disposal. The article also points out some of the challenges and limitations of implementing a blockchain system.