Blockchain, Distributed Ledger Technologies, and Implications for Audit Evidence and Controls

Blockchain and distributed ledger technologies (DLTs) are fundamentally transforming audit evidence collection, verification, and internal control systems. This chapter examines how blockchain's inherent characteristics—immutability, transparency, cryptographic security, and distributed consensus—create unprecedented opportunities for enhancing audit quality while presenting novel challenges for the auditing profession. Through analysis of permissioned and permissionless blockchain implementations, smart contract auditing, and continuous audit frameworks, this chapter demonstrates how DLTs enable real-time verification, automated control testing, and enhanced evidence reliability. Key findings reveal that blockchain integration reduces information asymmetry, enables automated audit procedures, and requires new competencies in cryptographic validation and smart contract analysis. The chapter addresses critical implementation challenges including data privacy concerns, regulatory compliance, standardization gaps, and the need for updated audit standards.

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