The Auditchain system is a public, transparent, standardised, cryptographically-supported audit trail, based on a decentralised continuous audit and reporting protocol ecosystem (DCARPE). It is designed to preserve the audit trail in a increasingly digital environment by creating a verifiable series of records that can be used to audit a business.

It uses a proprietary form of record, known as ‘streaming financial statements’, to allow real time reports ‘to be produced continuously, with the potential to eventually make traditional reporting methods obsolete’.

The goal of Auditchain is the reduction of fraud across the audit sector. It uses a protocol that assembles individual, discrete pieces of information into a distributed network, and the developers claim that the system should prevent inaccurate or misleading information from being included by making it immediately visible. Submitted information will be assessed by a volunteer network of professional auditors, each of whom will only see a minute fraction of the whole.

Auditchain is based on the blockchain protocol, a complex series of linked records. Individual blocks in a chain consist of an encrypted string of data from a previous block, a timestamp or date, and transaction data. Together they can be used for authentication when sharing data between users and are commonly used in information security, music distribution and as the basis of cryptocurrencies.

It is part of DCARPE Alliance, a non-profit organisation made up of members of the investment, legal, accounting, audit and financial reporting sector. Its stated goals include ‘seeing the audit information supply chain structured, standardised, simplified and sped up’.

The company will generate revenue from the sale of Audt tokens, of which there is a finite supply. Auditors will be paid Audt rewards for their involvement in the development of assurance standards and for contributing their knowledge.

Businesses will have to use Audt tokens for subscriptions to the network. Businesses can also contribute processing power back to the network from their machines, potentially reducing their assurance and reporting costs and amortising their own auditing costs.

Auditchain founder Jason Meyers said: 'Not only does the protocol enable the evaluation of all transactions being examined under audit, a process known as 100% population testing, but also the creation of a complete set of proofs at the time the transaction occurs, giving external auditors additional comfort when providing assurance on a continuous basis.

'Auditor adoption of the network can lead to greater independence and increased operational efficiencies within the assurance industry, giving a wider range of auditor selection for decentralised enterprise assurance and allowing larger audit firms to focus on other areas of consulting.’

Report by James Bunney