Abstract
SUMMARYThis article summarizes “Auditing the Blockchain Oracle Problem” (Sheldon 2021), which introduces auditors to the risks of having an irreversible business agreement codified on a blockchain using a short software program called a smart contract that relies on an oracle to provide information from outside the blockchain in order to execute correctly. The article begins with an explanation of the role that oracles play in the blockchain ecosystem and proposes a working definition of oracles. Next, the article highlights how the auditing standards from both the AICPA and PCAOB can be interpreted to classify an oracle as part of smart contract users' information systems, and that the oracle provides a robust set of services that qualify it as a service organization. Finally, the article describes the process used by an oracle to collect, store, transform, and transmit data, and highlights relevant risks and illustrative control objectives related to this process.
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