Land Registry, on the Public Block Chain ledger.

Given Australia is a nation obsessed with property, it is logical to address a simple, secure, and public available (read totally free) real estate boundary, and registry solution for the digital world.

Lets start at the beginning
Land tenure (a manner of possession) system is fundamental to, and provides investor and community confidence in:
Development planning, and economic growth and sustainability Social stability through housing and employment Financial security in economic development and property markets, and Natural resource and environmental management and sustainability.

“Ownership also involves a significant element of possession (refer Possessory Title), and…..it can be stated that ownership of the land surface extends just so far in each direction upwards or downwards vertically as the owner is able to bring and retain under their effective control” (Donnelly 1985).

The concept of “the cadastre” is a vital tool used by professionals involved in land and land related dealings. A cadastre is an official register showing details of ownership, boundaries, and value of real property in a district, made for taxation purposes (Collins English Dictionary 1979).

This blog proposes a secure, Digital Cadastral implemented on the Public Block Chain Ledger as the modern version of “the cadastre”

As shown below, all property boundaries, of arbitrary complexity, can be easily represented as a polygon of GPS coordinates. These can also be  displayed, on any freely available commercial mapping system, Google maps is used in the example below.

This basic concept, combined with the almost universal availability of GPS, and mapping services within all smart phones, underpins this approach and adds true security to the old insecure world of land registration and transfers. This solution closes the existing vulnerability of "which property" that exists within existing land registry and transfer systems today.

Accuracy in land surveys
The purpose of a land survey is to accurately map and designate land boundaries. Any inaccuracies can lead to potential legal issues down the track. It is generally accepted that a positional accuracy of 20 mm, plus 50 parts per million is required. Typical real-time kinematic GPS system are accurate to around 20 mm horizontally and 30-40 mm vertically. Such systems are regularly deployed within Australian farms today, as part of GPS based farming practice systems.  Hence the underpinning technology exists,and due to increased usage will follow a decreasing price and increasing global availability curve in the future; this technology maps into the proposed solution today. It is envisioned that a risk management approach be applied to the required level of accuracy required in any given circumstance, using the ability of the proposed system to tightly align  adjacent boundaries, thus removing a significant traditional risk from the "total" system.

The Proposal

Tamper proof, public accessible, immutable set of "golden land records", with full transparency, AML, privacy and inherent provenance. 

This proposal for the land registry specialist Public Block Chain Ledger, makes use of GeoJSON (Polygon) and Google Maps, the semantics (real property description) of a title transfer will be codified, and orchestrated within in the Public Block Chain Ledger and related protocols.. GeoJason has been chosen over KML, as the most suitable for modern digital systems.

The solution as secured by a Public Block Chain Ledger, is secure, makes use of global Secure Identities, is freely accessible to all, heralding a new generation of  services. Ownership is authenticated via the holding of HSM backed Elliptic Curve key-pairs.

GeoJSon Example
Residential property
{ "type": "Polygon",
    "coordinates": [
        [[30, 10], [40, 40], [20, 40], [10, 20], [30, 10]]  // up to 8 decimal places to give 1 mm accuracy
     "accuracy": [20, 40] // 20 mm hor, 40 mm vert
    ]
},
"properties": {
           "guid":"9a3aa3b3-c136-414e-824d-2739317684f4", // global unique property identifier
           "propertyId":"<SHA265(polygon values)>",
           "type":"Residential",
           "lot": "3",
           "plan": "RP 54367",
           "area":"8,530 SQM", // calculated from polygon
           "locality": {"county": "parish":"council"}
           "address":{"number":"street": "city":"state":"postcode"}
           "encumbences": "value"
           }

This polygon can be easily displayed on industry standard mapping solutions such a Google Maps or Google Earth.. The codification of the boundaries of any real estate, supports automatic, conflict and over lap process as part of the block chain ledger, protocols. Some existing government departments make use of KML: files, which can easily be converted to GeoJSon..

Processing

The GeoJSon is processed though a SHA265 transform, which is feed into the ECDSA signatures of the registrar, buyer and seller Block Chain Ledger transaction..

The advantage of including on a specialist Public Block Chain Ledger, is that it can be orchestrated with payment Block Chain Ledgers to produce "legal" finality and "real-time" settlements.

Many of the existing  parties which extract value from the manual process today, will simply disappear, producing a more efficient and secure result for all parties.

Barriers
Like most century old processes, this activity has traditionally be a government function, why we are still "walking with dinosaurs" today..

The latest developments in this space is the National Electronic Conveyancing System (NECS) ~ 2010 and still not operational, as this is part of the old world (read technically obsolete, long before it is even launched) and still fundamentally insecure.

Governments world wide have no idea of what "disruption and agility" actually means. NECS has nothing to offer its users, its is solely focused on protecting the incumbents, and the existing high cost and insecure system, i.e much like trying to keep "Taxi Licences" when the users have voted with their wallets, and simply moved to Urber.. The users MUST have a "voice" in these systems..end soapbox

Litmus test, the solution (what ever form), must be totally free to use, for everyone, protect participants privacy, be secure and have above all else provide full transparency and "finality"; and actually deliver a service to its users.

A Free, Public Block Chain Ledger of Land Registries.

Can an immutable  Public Block Chain Ledger for Land  registrations and transfers change the landscape for robust, scalable, enterprise systems that manage property rights in mature economies, only time will tell.

The "unregistered" of the world
Like all of these blogs, the technologies while first world focused, are designed to provide a "social dividend" within the third world populations. The approach outlined within this blog was designed to be applicable for places where currently there are no functioning land registry and deeding services.

Unfortunately, the real challenge (and much of the cost associated) with bringing property rights into the formal sectors lies more in the initial identification of rights holders, the details regarding their rights, restrictions and responsibilities, and ascertaining and documenting the geographical boundaries of the claim.

Our goal is to assist individuals who are left out of the formal property rights system, and that make up an estimated 70-80 percent of the global population.

For those citizens, an iterative first step in identifying and recording their property rights will be to document their rights on an open and accessible platform. This improved land information data is a step toward a more robust system which could eventually become formally recognized and recorded in a national level land registry, where a Public Block Chain Ledger based system will be relevant and useful.

References
http://www.icsm.gov.au/cadastral/Fundamentals_of_Land_Ownership_Land_Boundaries_and_Surveying.pdf
http://www.necs.gov.au/Land-Registries/default.aspx
http://www.necs.gov.au/ArticleDocuments/NationalBusinessModel-v11_300610.pdf

Disclaimer The contents of this blog should not be understood to be an offer for sale, accounting, taxation or investment advice but rather as educational information that may or may not meet your specific requirements.

The Unbanked, in the Digital World...

For most Australians, not having access to banking, credit and debit cards is almost unthinkable.
Yet most citizens in Asia, Africa, Latin America and the Middle East continue to transact with cash and coins, the closest to banking services is Western Union.

They are the world’s unbanked who have minimal contact with banks and financial services. Though the unbanked make up about half of the world’s adult populace today, emerging financial technology like Public Block Chain Ledgers and associated payments technologies are leading the way to to bring financial inclusion to the unbanked, right on their "Mobile Phone".

Today the unbanked stand at 2.5 billion people. Across the regions from Africa to Asia, rural farmers, women, the poor and the youth make up the largest pie of the unbanked. They grapple with the lack of access to proper banking infrastructure, tedious documentation and paperwork requirements, resulting in financial exclusion from the global financial economy.

All that is about to change, according to Managing Director at VillageMall, Charles Moore the pioneer of Block Chain Ledgers and infrastructure.With the global investment in the burgeoning fintech sector showing significant growth of $1,273 million to $4.1 billion from 2008 to 2014, digital payments for the unbanked have increasingly become a focal point for traditional banks and fintech startups to approach the money economy in a different light.

The objective is for the unbanked to remit, save, transfer, loan and purchase goods and services using mobile technologies, not new currencies, developing a new currency and all the political and social acceptance simply takes too long, the urgent need is today.
Many startups dont understand that money, credit, banking and finance are ultimately tied to trust, there is no point in a disruptive technology that does not address social "trust".
The solution requires a secure global ecosystem, which includes services for secure Global Identity,which still works, when there are no traditional forms of identification. The solution must allow participation in the global payments framework, including meeting the AML requirements when they apply. To drive down the costs this solution cannot be, yet another orphan solution, but must part of a single global ecosystem, with fit for purpose social trust mechanisms. This si no easy task, which traditional banks have not achieved in the last century.

The Unbanked and Mobile Money
In Australia's closest region, Southeast Asia, there are 270 million unbanked citizens many already have access to mobile phones. The Philippines, high in mobile penetration and known to be the third largest remittance market. Several telcos and banks in Asia, having anticipated the dawn of mobile banking for the unbanked, introduced traditional mobile wallets for daily transactions to citizens early on. Yet the only inovation is via start-ups experimenting with crypto-currencies like bitcoins for mobile financial services without the need of banks or other established financial platforms. These approaches have significant risks, while the traditional banking and credit card companies simply protect their momoplies.

The first observation, is that a new currency is simply, not required, to enpower the unbanked of the world, as noted by Charles Moore.

What is required is a Global Payments system based upon a Global Secure Public Block Chain Ledger, with the integrated secure Global Identification system which does not disadvantage the unbanked of the world.

Today, transaction, operation and processing fees are charged upon consumers and merchants for the financial services. Low-income earners, whose annual salaries can usually be counted in hundreds of dollars, grapple with the high cost of bricks-and-mortar transaction and remittance fees

Fintech start-ups are thought to be more robust and flexible with their operations and thus business models. As a result, the unbanked – consumers and local merchants alike – save on costs. Consumers are able to carry out mobile banking at a fraction of a fee, in many cases these can be totally free. In turn, merchants save on transaction charges, monthly or annual rental fees on top of installation and set up terminal fees.

Unlike fintech start-ups, traditional western banks have expanded through acquisitions over the years. Banks have tended to bolt new systems on to existing ones, rather than undertake the more disruptive and costly process of fully integrating them. Hence responding to these challenges is hard for banks, many of which have vast IT systems dating back to the 1960s and 1970s that are prone to problems (see almost monthly bank system outages, some lasting for days!) and expensive to maintain. Furthermore, as people check their accounts more regularly on tablets and smartphones, it puts additional strain on those systems. The fundamental issue remains, commercial banks still find it hard to offer banking services to poor people and still turn a profit.

Yet many fintech start-ups misunderstand that banks still play a dominant role in the global payments, and that a significant part of the fee structures are imposed from regulatory frameworks which are also outdated.

What is needed is a "fit for purpose" Global Solution for everyone.
Without disruptive technologies like the Public Block Chain Ledger, the unbanked will continue to grapple with remittance and conversion fees charged by transfer agents like Western Union, which can cost up to 8.5 to 10 per cent of funds transferred. Banks and credit card providers typically take from 3 per cent for all FX transaction, plus merchant fees, this is out of place even in First World countries. The the true incremental transactional cost is close to zero in a Digital World, with instant, atomic, transactions and zero settlement risk, all typical of modern Block Chain Ledger technologies.

It is simply immoral to take the person’s entire income for the cost of implementing and the transaction process; merchants selling by the roadsides cannot afford to pay for such technological payment, said Charles Moore.

Financial inclusion for the unbanked is said to have a potential to plough in as much as $23 billion to $73 billion into the Asian economy by 2030.

With mobile phone penetration increasing yearly and the number of Internet users increasing at 16 per cent annually, certainly there is much hope for Asia’s unbanked.

The only question is weather Australia will play any part in this opportunity on our door step, or we will continue to only invest in "property" which produces zero national wealth, for anyone other than speculators.

The opportunity is now, with the release of  the world first Global Block Chain Ledger technologies and infrastructure in Australian today. The only FinTech solution, exclusively protected by Hardware generated and protected next generation Elliptic Curve technologies,and yes, Hardware backed keys are provided free to the unbanked citizens, who wish to participate in the Public Block Chain Ledger.

Contact us, to be part of this exciting pathway, and help build a future for Australia, within the Global Digital World.

Get your secure Global Digital Identity, with Australian AML support today, and start to change the world for the better.

If you are an existing Australian Bank Customer, ask them about certifying "your" Global Digital Identity, as you already have gone thought the AML process once already, its time for you to take control over your Digital Identity.

Also see
Secure Global Digital Identity, for the Digital World
Identity Theft and Digital World
Free hardware generated and protected Bitcoin/BlockAuth ECDSA Private keys.
Decentralized Authentication
public-block-chain-ledger-navigation




Disclaimer The contents of this site should not be understood to be accounting, taxation or investment advice but rather as general product related educational information that may or may not meet your specific requirements.

Secure Global Digital Identity, for the Digital World

What's worse than paying your taxes? Having an identity thief steal your return payment, the IRS paid out $5.8 Billion in fraudulent returns in 2015.

In Australia we don't have the same SSN issue (the failed Australia Card), which is the root cause of most of the above USA tax fraud, but the expanding use of TFN's, drivers licenses (for ID not driving a vehicle, i.e. functionality creep) is creating the same fraud opportunities here in Australia, ask any of the 770,000 Australian's who suffered from identity theft. The problem is real and no solution exists today.

Principles:
a) personal data shall be exclusively under the individuals control, b) not held in any centralised system, which does not hold a current certificate for a system evaluation to EAL3 at a minimum, this applies to all government as well as commercial systems, c) be held in fewer and more secure places and d) be global and freely available for verification subject to principle a.

Identity Theft is a Global problem, as such this article proposes a Global Solution to protect individuals and organisations, while still allowing the shared "community" objectives like AML ect to remain in place. The current Government, and private industry Identity protection practices, belong to a world which no longer exits, have consistently failed the Individual, and community, and are simply not suitable for the current Digital World. A truly Global secure solution is required which is effective in both the bricks and mortar, and Digital world, and should be publicly accessible and free. The same solution should en power "third world Individuals" to enable a truly global digital world in which everyone can participate.

Ones identity is something we take for granted (after all it is you), and expect the various organisation, including governments we deal with to protect our identity. Yet these same organisation are at the heart of the identity theft problem. All of these organisation tend to blame the "Individual" for any Identity Theft when in fact they are the root cause, and only the Individual is affected by theft of their Identity.

“Digital identity“ is the sum of all digitally available information about an individual. It is becoming increasingly complete and traceable, driven by the exponential growth of available data and the big data capabilities to process it. The issue addressed within this article is the ability to link both the Digital and physical worlds, and how a compromise within the digital world can affect the physical identity, i.e Identity Theft..

The data elements which underpin, most widely used "personal" identifying data, are birth dates, names and addressees, and drivers licence numbers. The aggregation of this data, under pins our "identity", with regard to many Digital Transactions. Many organisations routinely collect this information, some like banks, use birth date continuously.
Information collected for the purpose of AML,should only be used for the specified purposes it was collected for, not for general bank operations, this is clearly defined in the Privacy Act (Section 6.1), yet banks, and other organisations routinely violate this principle. This ongoing violation of the Privacy Act, is one source of Identify fraud, yet continues without any checks or balances.

Today the collection of personal identifying data, has become epidemic, and grows each and every day, routinely night clubs, and hotels (with zero security protection, or regulations in place), photo copy an individuals drivers licence. Banks photo copy drivers licences, birth certificates, even though not required under any legislation. With a drivers licence, a birth date and data readily available from a postbox or even available on line, almost anyone can open a bank account on-line as "you" today. On-line organisation like Google, track and scan all of your on-line and digital activities, collecting any data which lows though your emails or any site you visit, while using systems that have zero security accreditation or any stated compliance with Privacy Principle APP8 (cross boarder data transfers).

Once your Identity is lost, it can be impossible to participate within today's digital and physical world; many find it takes years to address their Identity, after being stolen, their are cases where physical properties have been sold from under their owners.

"Identity crime is now one of Australia’s most common crimes, It’s estimated to cost at least $1.6 billion each year. ID crime is one of the key tools of organised crime groups. Yet Around 20 government agencies in Australia issue more than 50 million documents or credentials used as proof of identity" from DVS transcript.

In many cases, Government departments are the root cause of the problem, by forcing the Individual to provide identifying data when in fact only authentication is required. Additional "function creep" , has become epidemic as data is collected for a specific purpose,and then used for a different purpose, in the case of DVS a unrelated revenue generation purpose. Government departments are the source of almost all Identifying documents, these MUST NOT be outside of the Individuals "control", and must not be used for any purpose other than as collected. This simple requirement is explicitly covered in the Privacy Act Section 6.1 which also applies to Government departments.

A drivers licence is solely for the purpose of authorising an Individual to dive a nominated vehicle, it is NOT an identity card, it is not an Australia Card by default. The whole DVS concept is bizarre. Check out the total absence of even the most basic security for these systems, the best you get is some waffle or links to policy documents, there is not a single Certification available on any Government or Commercial Site. DVS has recently started selling individuals verification to commercial entities, yes using an Individuals data as a means to generate Government revenue, and selling this as enhanced digital security, truly bizarre.

Identity theft is a by product of the issuance and storage of these 50 million documents and credentials within a range of in-secure centralised systems, this is just crazy.

Today there are a range of commercial providers of "Identity" systems, sometimes labelled as Green ID?, mainly to support AML requirements, and many private solutions such as used by banks, and recently Governments via DVS? All of these have fundamental security flaws, they are centralised and the control over the Identifying data is not the exclusive control of the individual but rather the centralised authority. This is is fundamentally flawed concept, as the identifying data MUST be under the control of the Individual or Entity to whom the data belongs, this is so very basic, as only the Individual is affected by Identity Theft, non of these organisation are affected at all, and take no responsibility for any Identity Theft relating to the data they collect and store.

The whole concept of storing multiple copies of ones identifying data all over the planet in in-secure repertories (could not find a single provider who has its systems accredited to ITSEC at even the most basis EAL2 or more appropriate EAL3  level). Not a single operator has published their mandatory security policy which should include as a minimum encryption in transit and storage. See D&B Green ID, VEDA, and from 2015 the Australian Government via their DVS all fail this basic test.

Seriously, does no-one care less about Individuals, and theft of their Identity?

In the security world, centralised systems are known as "single point of compromise", the reason why one sees 100,000 of personal data affected,when one of these systems is compromised (credit card data is typically one such system). Centralised systems are not used for a single high assurance deployment anywhere in the world today, why is Identity data being stored in such insecure systems?

When ones "identity" data is compromised, this data cannot be put "back into the bottle" or fixed, once ones Identify is lost via compromise of identifying documents, one can be totally unable to participate in every day functions, yet the same insecure, centralised solutions are still in use today, as are the ongoing compromise of such systems systems.

Finally after 15 years of R&D and recent advances in cloud security, a solution to address both Identity Theft  and Anti Money Laundering compliance in a single secure and publicly available framework. The end of hidden or secret data storages with no transparency.

As part of the Global Block Chain Ledger network, we have deployed the worlds first totally Global Secure Identification system.

The system is based around a open standard, for a Secure Identification Number(SIN), which is derived from Elliptic Curve cryptography and keys generated and stored within cloud based Hardware Security Modules.

The solution to Identity Theft, is not complicated,
STOP:

• Collecting personal identifying data which is not required to perform the immediate activity, by the requesting entity.
• Storing any personal identifying data in any centralised system.
• Sharing or accessing any personal data without the explicit approval, on a per request basis by the Individual
• Storing aggregated personal identifying data in any System 
• Sharing personal data, outside of the initial receiving entity and system
• Routinely requiring personal identifying data as apart of an authentication process.

In order to prevent Identity theft, in all cases the Customer should be able to provide the "authentication token" to be used by any organisation when requesting authentication. This is very basic security and privacy requirement, and a part of the digital world today.

The fully decentralized, anonymous, secure identity.
Enter the Secure Identity Number(SIN), this is a totally digital identity that may be securely used for any type of transaction within the digital world, including replacement of the traditional username/password.
A SIN(s) is the unique record identifier by which this identity will be known, the key concepts are:

• there is no centralized infrastructure or entity required
• the secure identity is under the total control of the Individual
• can securely support the full range of Identity and authentication requirements

Attributes:

• Ownership can be digitally proven with high assurance, and possible non-repudiation
• Disposable
• Optionally attach sequence of key-value pairs (public proof) and hashes (private proof) to your SIN record. 
• Start out as anonymous identity, and as required, support opt out of anonymity on a per SIN basis, by attaching identifying key-value pairs (real.name = "John Smith").
• All key-value pair updates digitally signed by SIN owner (private key holder) abn=123456
• Third parties may offer digital attestations:
• Identity Verification, Inc. digitally signs a SIN as passing their 100 points check.
• Auction Provider, digitally signs a SIN as having a certain reputation score, on their website.
• Decentralized market users, digitally sign one another's SINs, building a decentralized reputation, social media.

Within the Public Block Chain Ledger, these signed  "attributes" are stored within the industry standard DNS "TXT" records for the entity identified by the SIN. This allows a totally secure, yet publicly accessible resource for any agency to securely query any AML related attributes, anywhere any-time for no cost. 

Customer identification and verification play a critical role in meeting anti-money laundering regulations and for maintaining an accurate customer database.

Address your business’s know-your-customer compliance obligations and reduce the business costs associated with outdated and inconsistent data with our Global Secure Identification Number(SIN) solution.

The World First Global, Secure Identification Number is now publicly available.
Any AML attribute verifications can be performed on-line, anywhere in the world for free.


Also see
http://villagemall-ceo.blogspot.com.au/2015/06/identity-theft-and-digital-world.html
http://villagemall-ceo.blogspot.com.au/2015/06/bitauth-decentralized-authentication.html
http://villagemall-ceo.blogspot.com.au/2015/07/public-block-chain-ledger-navigation.html

The following SIN attributes are supported in Release 1.0:
public enum attributeType
        {
            dob, // Date of birth
            adr, // Address
            bus, // Business number (abn)
            tax, // Tax number (tfn)
            drv, // Drivers licence
            pas, // Passport
            age, // Age card
            nam, // Individual name
            cpy, // Company, Trust ect name
            act, // Account, value is free form ASCII. Meaning within context of signing entity.
            bic, // Swift Code/Bank Identification Code
            lmt, // Payment Limit, value in local currency of signing entity
            rev, // Social Review of this entity, value is review scale of 1 to 10 where 10 is highest
            rat, // Social Reputation, based upon eBay rating, converted to a scale of 1 to 12
            rvk  // SIN is revoked, value is date of revocation, this makes any SIN disposable.
        }

Disclaimer The contents of this site should not be understood to be accounting, taxation or investment advice but rather as general product related educational information that may or may not meet your specific requirements.

Superanuation, Block Chain Ledgers and Digital Auditors

Following several auditing scandals, the most notable the Enron Scandal in October of 2001,for the first time in its modern history the global audit industry lost its most precious asset: public trust. Although the industry has since recovered, and the rules have changed to limit the risk of another scandal of similar proportions, the potential for auditor fraud, as uncovered in 2001, still remains.

Over the course of the evolution of financial markets, there was an obvious and increasing need for a system of public accountability. Traditional methods of accounting and bookkeeping allowed companies to record and report their financial information in a standardised format that could be more easily digested by fund members and public investors; but without adequate trust, the public was often left at the mercy of self-interested businesses.

The Auditor
An audit is quite simply an opinion provided on the financial statements of a Fund or Company based on pre-determined accounting guidelines (most commonly International Accounting Standards). The role of the auditor is to provide the trusted voice that states that opinion. On this, an enormous and lucrative industry has been built, with the majority of large players in global financial markets being audited by the “Big Four”.  Our Australian Superannuation sector has mandated yearly audits as part of the public confidence in the Superannuation system.

The evolution of bitcoin, and more recently specialist standard double entry accounting systems with integrated Block Chains, has been discussed as being potentially disruptive in the context of many major industries. In different scenarios, significant variations of block chain architectures have been suggested. Bitcoin, the most common use of a block chain, has proven to be tremendously valuable as a perceived network for broad transparency and security, where public participation and visibility is is essential element of this trust. This contrasts with the secretive nature of almost all Superannuation Funds worldwide, a similar situation applied to most investment managers,

Recently we have seen the emergence of both Public (bitcoin like) and Private Block Chain Ledgers, the latter have greater flexibility for data privacy and authorised access. In many implementations these are  based on standard double entry ledgers with block chain security applied to them, nothing radical like bitcoin, just a natural evolution of accounting systems.
Across this spectrum (from fully public to private) lies the solutions to many of the world’s centralised data problems, including financial reporting and auditing. The first commercial Private Block Chain Ledgers for the superannuation industry was released in 2015, we expect to see the first truly decentralised (bitcoin has a single distributed block chain)  Public Block Chain Ledger within the same year.

Problems and Opportunities
Those familiar with accounting will understand the concept of double-entry bookkeeping, as being an evolution “from single-entry, which just recorded what happened, to double-entry, where what happened has to be explained by reasoning with another account. So if you don’t have an explanation, you can’t have an entry”.

This is the basis of debits and credits in accounting, where one account tracks a balance and the other an event or activity. Over the course of an operating period, balances above accumulate with each additional entry. By the end of the year, Fund X may be accumulated balances for each of its members after all contributions, investment activities and payments are netted together.

This is the point in time where the auditor comes in. Because Fund X is accountable to its members, they require accurate financial statements to characterise the Fund activities and their resulting member benefits.

In essence, the auditor will test a reasonable sample of these balances, and the transactions they are comprised of, to make sure that the reporting is “close enough” to the truth (based on the materiality of the Fund). Often, the auditor’s test will include communicating with the respective parties to have them confirm the balance reported on Fund X’s financial statements.

In addition to this entire process, consider that for each customer and supplier, there could be another auditor testing the very same transactions on the other end. In terms of instances of redundancy and inefficiency, this is one of global proportions.

The Audit Premise
The audit processes involved in the scenario described above have remained relatively unchanged for decades, with slight improvements to change the nature of the information from paper to digital, but without questioning the underlying premise and the role of the auditor. The technology of a Block Chain Ledger is very well suited to address this scenario.

With the ability to compare accounting entries between two parties, while maintaining data privacy, this solution could significantly reduce the reliance on auditors for testing financial transactions. Once a match is posted to the block chain ledger, the transaction is time stamped and irreversibly recorded. each and every transaction and flows between systems can be verified from the source. You have the debit, the credit, and the confirmation by the network.

A block chain ledger solution could essentially allow for an automated third party verification by a distributed network to ensure that transactions are complete and accurate and unalterable.
As described, it is difficult to properly convey the size of this opportunity. The use of a block chain for the purpose of audit is unique from other uses as audits impact all industries and are the fundamental basis by which global financial markets are trusted by superannuation members.

The use of  private and Public Block Chain Ledgers, will revolutionise the audit process and significantly enhance the confidence in the Superannuation Industry. The rate of change in this area is truly amazing, and like all disruptive technologies there will be the inevitable winners and looses.

The future of secure Block Chain Ledgers and the next generation of digital audits is here today..

Further Reading

Triple Entry Accounting, and Secure Block Chain Ledgers.

Public Block Chain Ledger for Accounting, SMSF, and Portfolio processing.



Disclaimer The contents of this site should not be understood to be accounting, taxation or investment advice but rather as general product related educational information that may or may not meet your specific requirements.