The application of blockchain technology in the audit system

Abstract

This article systematically discusses the application of blockchain in the auditing process, and thoroughly analyzes the current research status, existing challenges, and future development trends. The blockchain shows great benefits in terms of optimizing the auditing process especially in increasing the integrity and reliability of auditing data, the effectiveness of auditing and automated execution of contracts. But the implementation of blockchain technology into auditing can also present some challenges and impediments, including authenticity of data sources, risk of privacy protection, and complexity of the technology. This paper also discusses some practical solutions and strategic approaches. To sum up, it is clear that this article focuses on the significance of blockchain in creating a reliable, safe, and effective auditing system.

1 Introduction

As commercial systems undergo rapid digital transformation, the traditional auditing mechanisms have been faced with challenges including inefficiency in data verification, information tampering risks, and long auditing periods (Wang et al., 2020; Li, 2024). Blockchain technology, which has decentralization, immutability and automatic execution of contracts as its main features, has become a potential solution to these issues (Liu, 2020). In terms of data authenticity, every transaction or record that is uploaded to the blockchain is time-stamped, encrypted and signed, and is validated by several nodes. Auditors are not required to check the source of the data again. Concerning data traceability, blockchain allows tracking every transaction throughout all its stages of implementation, enabling auditors to get full and immutable audit trails in real time and without using historical data (Siva et al., 2024; Handoko et al., 2022; Lindawati et al., 2023). Regarding the automation of compliance processes, smart contracts will be able to automatically execute pre-programmed auditing rules and alert when unusual conditions are detected, reducing human involvement (Prawitasari et al., 2025; Li, 2024; Kong and Yue, 2025). The benefits of blockchain are great, but its use in auditing has a number of challenges (Maffei et al., 2021). Technical obstacles include scalability, interoperability with legacy systems, and data security concerns; regulatory challenges involves legality of blockchain evidence, flexibility of regulations and the definition of the role of auditors; shortage of professional technical auditors and cost of applying blockchain technology (Yang and Son, 2025) are operational challenges (Vardia and Singh, 2022; Hakami et al., 2024). Even though the application of blockchain in financial services and supply chain management has been studied, the systematic evaluation of its applications impact in the auditing process is rather scarce. Many of the past reviews only considered auditing as one of the borderline application scenarios and did not pay much attention to the specific applications of blockchain in the auditing sphere.

Existing research mostly focuses on the application of blockchain in accounting and its impact, treating the application of blockchain in auditing as a secondary area. Even when studies do discuss blockchain applications in auditing, they primarily discuss the benefits of such applications. Few studies have proposed specific applications of blockchain in auditing. This study systematically screened 73 articles using the PRISMA guidelines for a review, with a focus on the role of blockchain in core auditing processes. The practical contributions of this study include: (1) discussing the application of blockchain in audit data access permissions, evidence collection, and data analysis; (2) proposing a blockchain-based audit process model, providing a new perspective on how blockchain reshapes audit processes; (3) using VOSviewer software to create a visual bibliometric network map, illustrating research hotspots and clusters.

The structure of the subsequent chapters of this article is as follows: Section 2 examines both the fundamental issues of blockchain technology and auditing; Section 3 provides a detailed explanation of the research methodology used in this article; Section 4 is an analysis of the research findings and the generalisation of the usage of blockchain technology in auditing; Section 5 deals with its application in practice and provides examples of it, specifically in the fields of real-time auditing and enhancing the efficiency of auditing; Section 6 is dedicated to the prospects that blockchain offers to auditing; Section 7 discusses the challenges of blockchain technology in the field of auditing; ultimately, Section 8 concludes the whole article.

2 Background and basic concepts

2.1 Core steps of the audit process

The fundamental steps of the auditing process may be broken down into five major stages. The initial stage is the audit planning and risk assessment stage, whose objective is to establish the direction and emphasis of the audit. Important steps performed in this stage involve understanding the audited entity and its environment, identifying and evaluating the risks of significant misstatements at financial statement level and assertion level, and developing the overall audit strategy and specific audit plans informed by the findings of the risk assessment. The second stage involves the design and implementation of audit procedures, and key activities are the development of overall responses to risks at the financial statement level, e.g., allocation of more experienced auditors to perform high-risk audit work; and development of additional audit procedures, e.g., control tests and substantive tests to address risks at the assertion level (Dunn et al., 2021). The third stage is the implementation of audit procedures and the collection of audit evidence, whereby sufficient and appropriate audit evidence is obtained through the execution of the procedures developed in the second stage. Key activities in this stage are performing inspections, observations, inquiries, confirmations, recalculations, re-executions and analytical procedures. The analysis, organization and evaluation of audit evidence constitute the fourth stage, and the gathered evidence is sorted and thoroughly analyzed, paying attention to the fact of evaluation of the reliability, sufficiency and appropriateness of the obtained audit evidence, and the identification of any anomalies in this process. The fifth stage is forming the audit conclusion and issuing an audit report, and. Based on the collected and evaluated evidence, an opinion is given about the overall financial statements, which demands auditors to make their judgments based on their professional judgement to ascertain the right kind of audit opinion.

2.2 Blockchain technology

Blockchain technology was first proposed by Satoshi Nakamoto in 2008. As the underlying technology of Bitcoin, its purpose is to solve the double-spending problem of Bitcoin (de Andrade Simões et al., 2021). Blockchain is a decentralized and distributed ledger technology that ensures transactions are immutable through cryptography and is maintained by multiple nodes. Its core idea lies in replacing reliance on centralized institutions with trust established through consensus mechanisms (Vujičić et al., 2018). The key technical characteristics of blockchain include decentralization, immutability, traceability, smart contracts, and consensus working mechanisms. The decentralized characteristic of blockchain can solve the problem of a single trust source, without relying on a single enterprise’s one-sided data; the immutability characteristic can ensure the authenticity of audit evidence and prevent data from being tampered with, resulting in untrustworthy audit results (Fahrezy et al., 2025); traceability can enable every step of data changes from the source to the terminal to be traced (Sethibe and Malinga, 2021; Fikri et al., 2022); smart contracts can automatically trigger the auditing process and generate auditing records when a certain transaction threshold is reached (Kong and Yue, 2025). By solving traditional challenges in data authenticity, automated execution of contracts, and auditing efficiency, blockchain provides a good technical foundation for modern auditing (Alex et al., 2022).

This chapter clarifies the audit basic process and blockchain technology, providing a theoretical basis for subsequent mechanism analysis.

3 Research methods

The introduction of blockchain has the potential to revolutionize the conventional audit models, but it also has a number of constraints and challenges. The given question talks about the particular limitations, challenges as well as future research directions of blockchain in auditing applications.

These research questions have been directly proposed based on the literature review. Many of the research works on the application of blockchain in auditing have not thoroughly examined the particular technologies and implementations in auditing. In order to address this lacuna, RQ1 covers the use of blockchain in the core stages of auditing, RQ2 examines its particular application scenarios, and RQ3 explores its issues and further studies perspectives. All research questions are listed and each question are answered based on evidence provided in the result analysis sections, namely, Sections 4–7. Particularly, Section 4 addresses RQ1 in relation to the steps in the auditing process where blockchain may be used, Section 5 addresses RQ2 concerning the practical application scenarios of blockchain technology; Sections 6, 7 respond to RQ3 respectively regarding the challenges of the present and the developmental directions of the future of blockchain.

Upon identifying our research questions, to ensure that we have an even richer array of relevant literature studies to collect, we searched through various academic databases and search engine sites such as IEEE Xplore, Web of Science, the ACM Digital Library and ScienceDirect, among others. Moreover, we have established strict screening criteria, the specific screening criteria are shown in Table 1.

Based on the above criteria, we conducted a search in the IEEE Xplore, Web of Science, ACM Digital Library and ScienceDirect databases. In the IEEE database, we used the search command (“Document Title”: blockchain OR “Document Title”: smart contracts) AND (“Document Title”: auditing OR “Document Title”: audit) AND (“All Metadata”: financial OR “All Metadata”: accounting), and limited the time range to 2017–2026. We obtained a total of 37 papers. In the ACM Digital Library database, we conducted the search using the following command [[Title: blockchain] OR [Title: smart contracts]] AND [[Title: audit] OR [Title: auditing]] AND [[All: financial] OR [All: accounting]] AND [E-Publication Date (01/01/2017 TO 12/31/2025)], and obtained 30 papers. In the Web of Science database, we used the search command: blockchain OR smart contracts (Title) and auditing OR audit (Title) and financial OR accounting (All Fields), and optimized the search by selecting papers within the Business Finance or Business or Management or Economics categories. We obtained a total of 47 papers. In the ScienceDirect database, we conducted the search using the command (Year: 2017–2026; Title, abstract, keywords (“Blockchain” OR “Smart Contracts”) AND (“audit” OR “auditing”)), and selected the Subject areas of Business, Management and Accounting and Economics, Econometrics and Finance. We obtained a total of 96 articles.

The literature screening process followed the PRISMA guidelines. A total of 209 articles were initially retrieved. After removing duplicates, 193 articles remained. During the title/abstract initial screening phase, 95 articles were excluded for the following reasons: (1) The full text focused on emerging technologies but did not primarily focus on blockchain. (2) Irrelevant to blockchain and only focused on audit research. (3) The research focus did not involve the audit domain but instead focused on other blockchain applications. (4) The full text only focused on blockchain technology, such as smart contract vulnerability security audits, IoT data audits, cloud storage audits, rather than primarily focusing on financial audits.

During the full-text review phase, 22 articles were excluded, with specific reasons including: (1) Full text could not be obtained; (2) Content mainly discussed blockchain accounting rather than auditing; (3) Insufficient research design; (4) Literature type was editorial or magazine article.

To minimize potential researcher bias, two researchers independently performed this step. Disagreements or uncertainties were resolved by comparing the results obtained. The purpose of this step was to cover all possible studies related to the research topic of this study.

After the above screening process, a total of 73 articles were finally included for the review. The screening process is shown in Figure 1, and the screening results are presented in Table 2.

FIGURE 1

For the above-mentioned searched literature, we have classified and organized them. According to the publication years, the trend of the number of relevant literature is shown in Figure 2, which indicates a continuous upward trend from 2018 to 2025. In 2018, there was only 1 piece of literature, while it increased rapidly from 2019 to 2021. From 2022 to 2024, the publication level remained stable. In 2025, the number of publications reached 16 again, indicating that this field has been continuously receiving extensive attention from the academic community in recent years. According to the distribution of source databases as shown in Figure 3, 73 pieces of literature were from Web of Science (15 pieces), ScienceDirect (23 pieces), IEEE (21 pieces), and ACM (14 pieces). According to the distribution of literature types as shown in Figure 4, there were 38 journal papers and 35 conference papers, with the two quantities being roughly the same. Since journal papers focus more on theoretical depth and long-term research conclusions, while conference papers highlight technological frontiers and the latest progress, the combination of the two can enable this article to comprehensively reflect the application of regional blockchain technology in the field of auditing. We also sorted the 38 journal papers included in the review by the number of publications and combined with the impact factor to obtain the TOP10 core journals in the field of blockchain auditing. Many of the papers come from JCR Q1/Q2 regions, and the academic quality of the literature is high. The results are shown in Figure 5; according to the research themes, they are classified into six major categories, as shown in Table 3. Through the above literature organization, we compared the traditional auditing process with the new process in the blockchain environment. This paper extracted the unique auditing stages of blockchain, as shown in Figure 6.

FIGURE 2

FIGURE 3

FIGURE 4

FIGURE 5

FIGURE 6

We also used VOSviewer software to create a keyword co-occurrence network, analyzing the main research themes and issues regarding the application of blockchain technology in auditing. In the keyword co-occurrence analysis, we set a minimum threshold of three occurrences for keywords and constructed a map using 45 keywords. VOSviewer converts the data into a visual format, grouping frequently occurring keywords into six major clusters in the view, each represented by blue, red, green, yellow, purple, and orange (Figure 7). Keywords of the same color belong to the same cluster. Larger circles indicate higher importance and significance of the keywords. Among them, blockchain is the core node, with audit, information, and accounting as secondary core nodes, indicating that blockchain technology is the core research.

FIGURE 7

The above classifications are determined based on objective attributes such as literature titles, research contents, and publication information, and can comprehensively and systematically present the research of blockchain in the field of auditing.

4 Result summary

The paper highlights that blockchain technology has a potential to revolutionize the auditing system in some of its major dimensions and ease the burden of its auditors and contribute positively to the effectiveness, reliability and openness of any given auditing task. Through making use of the properties of blockchain, namely, the distributed register, decentralization, the on-chain control of access and smart contracts, it gives suitable implications of how the optimal audit working procedure might be achieved. The application process of blockchain in audit is shown in Figure 8.

FIGURE 8

4.1 Access permissions for audit data

Financial data constitutes significant and sensitive information for a company. Once it is leaked, it can cause irreparable losses to the company. Thus, although the blockchain technology brings many benefits to financial data, there are also some concerns. Consequently, the setting of access permissions for financial data becomes particularly important.

Different blockchain technologies, such as public chains, private chains, and consortium chains, all have an impact on data sharing, dissemination, and security, and this data is crucial for the formation of financial reports (McCallig et al., 2019; Schmitz and Leoni, 2019). The existing blockchain solutions still have significant problems in terms of confidentiality and privacy protection (Mahendran et al., 2025). For public blockchains, the public sharing characteristic of their ledger data directly raises concerns about privacy leakage and information confidentiality, and most public chain networks lack native encryption functions. The data encryption and decryption operations in public blockchains may cause additional overhead in system execution, and even may lead to scalability issues during the deployment and operation of smart contracts (Guegan, 2017; Belen-Saglam, et al., 2023). In contrast to public blockchains, the consortium blockchain network provides different solutions to these problems. The consortium blockchain does not require client enterprises to encrypt all transmitted data one by one. Instead, it builds and strictly enforces a refined access control mechanism to precisely authorize the data access rights and network participation qualifications of specific users. This design effectively ensures confidentiality and privacy security while also taking into account system scalability and cost-effectiveness (Vincent et al., 2020; Kong, 2025). So, To protect the security of company data, most companies choose consortium blockchain network as the access permission settings for auditing data collection, which may better meet the requirements of the company’s relevant stakeholders. However, which blockchain technology is the most suitable for protecting data privacy involves many organizational and social factors, including technical complexity, cybersecurity, and auditors’ utilization of blockchain. Research in this area can improve the security of auditing data, meet the privacy needs of all parties, and be cost-effective, etc (Georgiou et al., 2024; Ziemba et al., 2025; Bonca, 2025).

In the consortium blockchain network, the access rights to audit data can be designed as a hierarchical, role-based and clearly-defined system. Auditors act as “read-only nodes” on the client’s blockchain and are authorized to access the client’s private or permissioned blockchain as a “read-only identity”, enabling them to access complete transaction data (such as sales records, IoT data, etc.) in real time without the ability to modify the underlying information (Appelbaum and Nehmer, 2020). This arrangement maintains formal independence while obtaining audit evidence. Secondly, auditors can establish an external audit blockchain and import the data extracted from the client’s blockchain into it. This design of separating the client blockchain from the external blockchain established by the auditors avoids potential independence conflicts that may arise from directly conducting audit procedures on the client’s chain (Rozario and Thomas, 2019).

Identity management based on smart contracts can further strengthen access control. The auditors should give them specific identification like employee numbers and ID numbers to authenticate their identifications to register them. Next, the system will create a public-private key pair particular to the auditor, which serves as the auditor credentials to access the company financial information, and the information about the auditor will be added to the auditor list. Simultaneously, there will be a unique access list of the persons who have the right to gather data. Data collection smart contract decides if the auditor may acquire audit evidence including enterprise ERP, CRM system data and blockchain transaction record by confirming whether the auditor has its hash public key in the access list. This mechanism guarantees the uniformity and confidentiality protection in audit evidence gathering (Cangemi and Brennan, 2019). The auditors are able to get audit evidence only within the given range, and every login and access operation will be recorded to create a traceable operation trail (Wu et al., 2025; Said et al., 2026). This permission management system using smart contracts does not only guarantee the legality and adequacy of auditor access to audit evidence but also prevents unauthorized access and data leakage by means of decentralized verification systems and stringent permission allocation. So, it can be used to increase the security and reliability of audit evidence.

4.2 Collection of audit evidence

The process of gathering sufficient and appropriate audit evidence is one of the essential components of the auditing process and the activity that consumes the greatest amount of time on the part of both auditors. The major reason why auditors gather evidence is to ensure the completeness, accuracy, cutoff, and classification of the financial statements are ensured, and thereby issue a reasonable audit opinion. A condition to the development of an audit opinion is that the gathered audit evidence should have relevance and credibility simultaneously. This fundamental demand creates numerous challenges to the auditor at the stage of collecting evidence. In particular, they are as follows: checking the completeness and accuracy of records, determining whether data have been modified, confirming that transactions are conducted according to the correct authorization processes, checking the balance of third parties and customers, identifying any missing transactions, and lacking convenience to get the needed data, among others (Ameen, 2025; Vincent et al., 2020).

The application of the blockchain technology can change the way audit evidence is obtained (Elmaasrawy et al., 2025). One of the features of blockchain is the decentralized ledger, which allows recording the transactions in real-time and storing the transaction information in an immutable manner (Yawalkar et al., 2023). Auditors may not depend on the intermediary data offered by companies, but can directly check the authenticity of transactions on blockchain nodes, and therefore shift the conventional random sampling auditing mode to full data auditing and real-time auditing (Dyball and Seethamraju, 2021). As an example, auditors do not have to ask their clients to provide bank statements or send confirmation requests to third parties when auditing. They can directly verify the authenticity and integrity of the transaction data (the amount of transaction, participants, times of occurrence, etc.) using either the open or authorized access to the blockchain ledger (Abreu et al., 2018). This method simplifies the process of gathering audit information, minimizes the possibility of information distortion during transmission (Ameen, 2025), and assures that the gathered transaction information is based on the original record of information. Simultaneously, encryption technology, such as Zero-knowledge proof technology, guarantees the information security and provides a foundation of trust through permanent traceability of audit evidence. Auditors can precisely see what the origin of the data is, what the flow path is, and how it has been modified, which enhances the integrity of the audit trail and reduces financial fraud risks. (Alagha and Ozcelik, 2025; Sheldon, 2019; Secinaro et al., 2022). Blockchain has the potential to enhance the integrity of evidence, auditors have access to the enterprise private permission chain as a read-only node and receive all the information about the transactions, including smart contract logs, IoT data, and any other multi-source data in real-time without having to depend on enterprises to manually extract or convert the data. It reduces the time spent on manual sorting, eliminating the risk of human manipulation, and improves the overall efficiency of the work. (Liu et al., 2024; Siva et al., 2024; Supriadi et al., 2020).

Moreover, blockchain allows information sharing across chains. The evidence of auditing can be transmitted in safe mode between enterprise blockchain and external audit blockchain, so that smart audit applications may execute tests and analysis automatically. The blockchain based system of gathering audit evidence, apart from improving the real time character and transparency of the evidence, creates a technological basis to reach the continuous audit and active risk detection (Rozario and Thomas, 2019; Parra-Domínguez et al., 2025).

The immutable feature of blockchain is of great importance because it makes sure that the record of financial transactions cannot be changed by people thus making the information highly credible. Besides, the transaction records are directly transferred to the blockchain, which allows auditors to get the up-to-date and full audit evidence. Decentralized distributed ledger technology enables auditors to gather audit evidence without dependence on a centralized authority, which promotes transparency of data and improves the level of credibility.

4.3 Analysis and organization of audit evidence

In the traditional audit engagements, because of the massive amount of audit data and the constraints of auditing expenses, there has been a widespread use of the auditing sampling approach. Nevertheless, since the method is unable to address all samples, it might miss several risks and abnormal transactions. The complete record of all transactions of the enterprises can be preserved using the distributed ledger technology. Auditors can directly access all financial data within the authorized scope, thus enabling them to carry out comprehensive audits (Bonyuet, 2020). In comparison with conventional audit models, this approach reduces the risk of sample bias and enhances the accuracy and reliability of audit decisions. Also, with the help of big data and smart analysis tools, the auditors are able to organize, clean, and analyze large volumes of data in a very short period of time, which allows them to discover underlying abnormal problems and possible sources of risk in complicated networks of transactions. This change of the auditing paradigm does not merely expand the audit coverage, but also makes the process of identifying risks more forward-looking (Arham, 2025; Yuan et al., 2025).

Smart contracts, as one of the core applications of blockchain technology, have driven the development of automated auditing techniques due to their immutable nature (Pimentel et al., 2025). Smart contracts, which are programmable intelligent auditing programs, can be used to provide automated and real-time examination of audit evidence in the blockchain auditing framework (Guo et al., 2025; Kong and Yue, 2025). Intelligent auditing programs have the ability to automatically do a variety of tasks including matching sales orders and testing whether there is consistency between delivery notes and invoices among others (Sun et al., 2023). Besides, smart contracts could also process diverse types of structured and unstructured financial data existing on the blockchain, such as IoT sensor readings. They can promptly identify anomalies or risky items and track them through subsequent intelligent programs or manual intervention. Apart from enhancing audit effectiveness, this mechanism significantly improves auditing efficiency and coverage, and it also turns over a post-event verification approach on auditing into a steady, almost up-to-date risk-monitoring approach, which will make audit reports more timely and transparent (Arianpoor and Borhani, 2025; Rozario and Thomas, 2019; De Andrés and Lorca, 2021; Hamzeh et al., 2025).

Moreover, the intelligent auditing programs are considered as the third generation of auditing data analysis (ADA 3.0), which fosters the change of the auditing paradigm through static/periodic inspections to dynamic/ongoing validation, and contributes to filling the gap in expectations between auditors and users of reports. As an external audit blockchain ecosystem, a hierarchical and permission-controlled allows various stakeholders like auditors, regulators (e.g., PCAOB), audit committees, and major investors to access or monitor the implementation and outcomes of the auditing program in real-time depending on their permissions. This design not only fosters the development of a continuous and proactive audit model but also provides an operational framework for enhancing audit quality and transparency. Importantly, it signifies a fundamental shift from tool-assisted auditing (ADA 2.0) to embedded smart contract execution (ADA 3.0) in the auditing methodology (Rozario and Vasarhelyi, 2018).

5 Application and case analysis

5.1 Efficiency of audit

Under the traditional audit models, the collection and analysis of audit evidence are often inefficient. By leveraging blockchain technology, the efficiency of audit work can be significantly enhanced, reducing errors and costs (Sheela et al., 2023).

The permissioned consortium blockchain framework stores audit logs in a decentralized manner, enabling auditors to access transaction records and asset changes directly from the chain in real time (Ahmad et al., 2018). Unlike traditional centralized databases (which have the risk of single-point failure), the blockchain’s timestamp and hash link characteristics can achieve complete traceability throughout the “transaction initiation - processing - recording” full life cycle (Kong and Yue, 2025), eliminating the delays in batch file submission and cross-validation. Compared with the traditional auditing process, this will greatly shorten the time required for information acquisition and verification (Liu et al., 2019).

In transactions involving multiple entities such as suppliers, customers, and financial institutions, the shared ledger feature of blockchain enables real-time synchronization and consistency of transaction data among all participants, such as in supply chain settlements. Auditors do not need to separately send inquiries to multiple parties to verify the authenticity of transactions; instead, they can directly obtain complete transaction information through the shared ledger, solving the problems of information asymmetry and delayed reply in traditional cross-entity audits, significantly improving the efficiency of collaborative audits (António de Almeida and Lobo Marques, 2024; Wang et al., 2022). Furthermore, when federated blockchain is used for collaborative audits, the zero-knowledge protocol enhances the efficiency of cross-audit institution transactions - auditors can verify inter-organizational transactions without disclosing proprietary data (Zheng, 2025). This reduces the need for manual coordination among auditing companies, reduces sampling costs a lot, and changes the audit pricing from being based on customer size to being based on transaction volume, thereby enhancing market efficiency (Cao et al., 2018; Elommal and Manita, 2022).

PwC has built a “networked auditing system” based on blockchain, leveraging distributed ledger technology (DLT) to achieve seamless and real-time integration with the enterprise financial system, thereby establishing a transparent and trustworthy cross-institutional data sharing network. In this system, every transaction is recorded in an immutable block, allowing auditors to directly trace and verify the authenticity and completeness of the transactions, without having to manually check each one as in the traditional model. This not only significantly improves the accuracy and efficiency of the auditing process, but also reduces the manual reconciliation time under the traditional model by 90%. Additionally, according to PwC’s case study, the auditing cycle for the annual report of a multinational company was shortened from 3 months to 6 weeks by blockchain, and the labor cost was reduced by 40% (PwC, 2025; Zhang et al., 2025; KPMG, 2017). The case data from Deloitte shows that a bank, by introducing innovative auditing processes and digital tools, reduced the credit certificate auditing cycle from the cumbersome 14-day process to just 2 days for efficient completion (Deloitte, 2021; Zhang et al., 2025).

5.2 Real-time audit

The traditional auditing model involves conducting audits after the business transactions occur, analyzing the risks of the transaction and detecting whether there are any fraud or fraudulent activities (Anwar et al., 2019). This approach cannot provide timely compensation for the losses incurred by the enterprise during its production and operation. Blockchain technology, through technologies such as smart contracts, can transform the post-audit model into a real-time auditing model. It can monitor the transaction process of the enterprise in real time, promptly notify the enterprise of any abnormalities, transactions, and existing risks to prevent significant losses (Wang et al., 2020).

The four major accounting firms have achieved the transformation of the auditing process from regular to real-time through their self-developed tools and collaboration within the ecosystem in blockchain real-time auditing (Handoko and Lantu, 2021). The core focuses on scenarios such as digital asset reconciliation, smart contract monitoring, supply chain traceability, and cross-border transaction verification. Deloitte uses the Rubix platform and Ledger Align tool to achieve automatic on-chain data reconciliation and private key verification, supporting real-time auditing of digital assets and supply chains (Zheng, 2025); PwC relies on the Halo suite and real-time auditing tools to serve private equity funds and crypto asset compliance, achieving daily automatic update of private chain data; EY provides real-time verification of high-concurrency transactions (3,000 transactions per second) and cross-enterprise data collaborative auditing with EY Blockchain Analyzer and Baseline Protocol; KPMG uses the intelligent auditing platform with AI integration to ensure the real-time nature and quality controllability of smart contract and supply chain finance auditing through the “double-blind verification” mechanism. The four applications jointly promote the improvement of auditing efficiency (cycle shortened to daily/real-time), real-time risk warning and traceability of compliance evidence, with SaaS tools, AI + blockchain integration, and cross-chain adaptation becoming the mainstream trend (Deloitte, 2021; PwC, 2024; EY, 2024; KMPG, 2025; Chen et al., 2025).

The near real-time update feature of blockchain data, combined with the automatic execution of smart contracts, enables auditors to establish a continuous monitoring system instead of conducting one-time data collection only at the end of the period. This realizes the paradigm shift from “post-period auditing” to “audit during the process” (Guo et al., 2025; Kong and Yue, 2025).

5.3 Authenticity of audit data

The current global climate change issue is facing severe challenges. The carbon emissions trading market has become a beneficial tool for countries to achieve their carbon neutrality goals. In recent years, the global carbon market has continued to expand and its coverage has become increasingly extensive. However, the authenticity and reliability of carbon data have become a difficult problem that hinders the efficient operation of the carbon market. For instance, the data reported by the emission entities may have omissions, errors, or even intentional exaggerations; third-party review institutions, due to the use of sampling inspection methods, cannot check all the transactions and emission records, etc. These issues of data credibility seriously undermine the trust of those involved in carbon market transactions, hinder the development of carbon finance, and also make the auditing problem difficult to solve. The decentralized, immutable, and traceable nature of blockchain may provide solutions to the problems faced by the carbon market transactions. PwC collaborated with Hashgraph Group and launched the EcoGuard tool based on the ESG platform of Hedera. This tool is used to record ESG data in real time. This indicates that PwC’s experience in carbon reporting, sustainable auditing, and international standards such as CSRD, ISSB/IFRS has been integrated into the blockchain platform, ensuring that environmental disclosure is transparent and auditable. BCarbon is a non-profit carbon registration agency launched by the Baker Institute for Public Policy at Rice University. In February 2026, this agency placed the Web3-native carbon registration system on the Hedera network, and over two million issued carbon credits were transferred to the blockchain. These two examples demonstrate that blockchain technology can provide a more fair and transparent market environment for carbon transactions, enhance the authenticity of auditing data, and improve market operation efficiency.

5.4 Case analysis

Liu et al. (2022) discussed the application of blockchain in auditing, using a pork supply chain consortium chain as the application scenario to fully demonstrate how the core features of blockchain play a role in auditing. First, all participants in the supply chain, such as farms, slaughterhouses, processors, logistics, and customs, jointly maintain the same distributed ledger. Transaction processes are verified by multiple parties before being recorded on the blockchain, ensuring data consistency across all authorized nodes. During audits, there is no need to confirm documents with each party; once transactions are recorded on the blockchain, they cannot be deleted or altered, forming a traceable audit trail. Second, by adopting a consortium chain mechanism, auditors are granted read-only permissions at each authorized node. This allows auditors to trace the entire process data of each batch of pigs from the farm to sales, but auditors cannot modify the data, thus achieving permission-based tracing. Third, due to the presence of smart contracts, accounting entries can be automatically triggered when logistics are signed for, goods are received into inventory, and payment conditions are met. Auditors can directly and in real-time obtain the results of contract execution, enabling continuous auditing. This case indicates that blockchain can improve auditing efficiency by automatically completing bank reconciliations, intercompany verifications, and cost allocations, significantly reducing the lag in audit reports. Audits do not have to wait until year-end for reconciliations, confirmations, and inventory counts; audit evidence can be obtained in real-time, allowing audits to proceed in real-time. Due to the immutability of data, it can significantly reduce risks of earnings management, fictitious transactions, and discrepancies between books and physical assets by enterprises. Furthermore, full-chain traceability makes misstatements easier to detect, and abnormal transactions can be quickly identified through smart contract verification to locate error sources. Food safety and quality issues can also be promptly discovered, which can significantly enhance audit quality Lei et al. (2022).

However, the application of blockchain also has certain limitations. Blockchain can only ensure that data on the chain is not tampered with but cannot guarantee the authenticity of source data. For example, data such as the quantity, quality, and price of pork need to be manually uploaded. If the initial uploaded data is modified, it will lead to inconsistencies between on-chain and off-chain data. Therefore, audits still need to verify the reliability of the data upload process. Blockchain can only address the collection of audit evidence, but some professional judgments still require the expertise of auditors, and technology cannot completely replace human involvement (Sargent, 2022). For small companies, building a consortium chain and connecting it with enterprise ERP systems may be too costly, making cost-benefit considerations a key factor (Bellucci et al., 2022).

Therefore, through this case analysis, blockchain can reshape the audit process and improve audit efficiency but cannot completely replace traditional audit procedures and the professional judgment of auditors. Blockchain technology and auditors still need to work together.

6 Discussion

Blockchain technology has provided a lot of changes opportunities to the auditing sector that will have fundamentally transformed the conventional auditing system (Ariciu et al., 2026). Its de-centralized and immutable and traceable features are pushing auditing operations into increased transparency, more efficient auditing, and increased credibility. Four major characteristics of blockchain, viz., the integrity of data, automated processes, inter-institutional cooperation, and real-time observation, describe its effect on the auditing ecosystem and its possible use in the entirety (Kolisnyk et al., 2023; Li, 2024). With the addition of advanced technologies like artificial intelligence and big data analysis, blockchain technology extends its functionalities to risk warning, fraud identification, and compliance validation which form essential parts of building the next-generation intelligent auditing system (Abu Huson et al., 2024; Ressi et al., 2024; Han et al., 2023).

The integrity of data could be considered as one of the most fundamental benefits of the application of the blockchain into the auditing system. Blockchain may be able to provide unalterable audit evidence across the entirety of the generation to storage process by means of hash encryption, timestamps, and distributed ledgers, which greatly diminishes the chances of audit evidence being intentionally altered or erased (Handoko et al., 2022; Mishra et al., 2022). The central technologies are not only able to add value to the reliability of auditing trail, but also offer a technical basis of adherence to International Auditing Standards and other regulatory requirements across different countries. As opposed to the conventional centralized auditing storage architecture, the blockchain auditing log system has proven more resistant to fraud and verifiable in several research studies, making it a more desirable solution to the ever-complicating problem of auditing fraud.

The issue of information silos has been a constant in the traditional auditing process. It is very hard to share different forms of financial and non-financial data between different institutions, which greatly disrupts how effectively the cooperation and supervision functions of each department take place (Kong and Yue, 2025). But blockchain has the ability to create permissioned or consortium chain structures, whereby it allows accounting firms, regulatory bodies, and audited organizations to exchange information, which is relevant to auditing and that must be exchanged under their permission, in a secure manner and in rel-time, and that enhances the transparency of the entire auditing procedure to a great extent (Liu et al., 2019; Song and Moon, 2021).

With the complexity of commercial transactions growing, the volume of audit information is also growing. There are various data types, and the data interrelationships between them are complicated (Pizzi et al., 2021). Blockchain system processing capabilities and storage scalability are especially critical. When there are strong constraints on the audit real-time performance, it is evident that conventional public chains cannot perform well. Rather, consortium chains incorporating hierarchical designs, side-chain designs, and effective consensus mechanisms like Practical Byzantine Fault Tolerance (PBFT) are gaining popularity as the optimal option in the audit system (Lombardi et al., 2022; Zheng, 2025; Ahmad et al., 2019). As an example, a few experimental audit systems use a hybrid model of chain-on-chain storage, in which important audit evidence is kept on-chain, but a significant amount of detailed data is kept in off-chain databases. It is much more efficient in conducting the audit process and also guarantees the safety of the audit evidence. To enhance blockchain performance testing and optimization in large scale enterprise audit situations, additional studies should be conducted in the future.

At the same time, the cost and sustainability are also important elements that define the feasibility of the blockchain auditing system. Through implementation of a low-energy usage consensus mechanism (e.g., the proof-of-stake consensus mechanism) and by modularizing the smart contracts, the audit process may be automated at least in case of reviewing the supporting documents and report writing, which will reduce the labor and time expenses. In addition, the transparency and traceability features of blockchain can decrease redundant audits, decrease coordination costs, and improve the overall efficiency of the auditing process (Yang and Son, 2025). Nevertheless, much work has yet been done regarding the first technology investment and compatibility with the current auditing information systems, and empirical studies are required to examine the cost-effectiveness and encourage more widespread use of the technology (Youssef et al., 2025).

Blockchain with its real-time processing and ongoing audit facilities is changing the conventional post-audit framework (Man and Fernandez, 2023; Dai et al., 2019; Zhou et al., 2021). Blockchain can access transaction information in real time through integration with enterprise financial systems, IoT devices, and external data sources in the cloud and instantly upload the data to the chain (Liu and Wu, 2025; Cui et al., 2025), which allows auditors to monitor changes in important business processes and data in real time, detect possible risk points automatically and evaluate the risks. In case risks are found, warnings would be sent. Furthermore, when used together with artificial intelligence programs to examine the information on the chain, abnormal transactions and fraudulent practices could be detected and warned faster (Banu et al., 2024). So, the detailed examination of the integrated application of blockchain and auditing analysis tools may also help to improve the level of automation in the field of auditing work (Faccia et al., 2019).

According to these four core drivers, the blockchain technology is a good source to build a reliable, effective and cooperative modern system of auditing.

7 Trends and unsolved challenges

As cutting-edge technologies such as artificial intelligence develop, the application of blockchain technology in audit systems has become increasingly mature. Nonetheless, as well as blockchain is helping evolve the auditing sector, it is associated with a significant number of challenges. Right now, the topmost applications of the focus are largely found in the fields like managing audit evidence chains, auditing on the basis of the multi-party collaboration, real time compliance monitoring, and intelligent detection of risks. All these trends have a close relationship with the core abilities of blockchain including its immutability, transparency, traceability, and automatic performance of the smart contracts.

Even though the use of blockchain in the sphere of auditing is very promising, it encounters several challenges. First of all, from a technical perspective, the volume of auditing data is large and the structure is complex, which means that there are high demands on the throughput, storage costs, and ability to perform complex queries of the blockchain network. Secondly, there are massive interoperability issues when integrating with other systems like enterprise resource planning (ERP) and auditing software. Furthermore, there is regulatory and guideline ambiguity. The current auditing guidelines, definitions of legal responsibilities, and rules of electronic evidence have not yet been adjusted to the blockchain technology. As an illustration, the coordination between the immutability of blockchain records and the traceability requirements of audit working papers and the error correction processes remains to be explored thoroughly on the legal and professional fronts (Gauthier and Brender, 2021). Although blockchain technology ensures the integrity of data on the chain due to its immutable nature, it cannot guarantee the authenticity and accuracy of the data before it is written onto the blockchain. If the data has been tampered with or contains errors during the collection or input stage, even if the data on the blockchain is immutable, the formed evidence on the chain is difficult to reflect the true essence of the economic transactions. The risk of fraud will further increase. Therefore, this “garbage in, garbage out” problem is the limitation of blockchain in auditing applications (Alles and Gray, 2020). How to establish an effective data verification mechanism to improve the consistency between the data on the chain and the real transaction data it represents is also a key issue in the application of blockchain technology. Although the application of smart contracts significantly improves the automation level of the auditing process, its execution logic is completely dependent on the pre-written code. Once the contract code has design flaws and logical vulnerabilities, it will directly lead to errors in the execution of auditing rules, and even if the code is maliciously rewritten, it may cause the auditing to fail. Compared with traditional manual judgment, the “code as rule” characteristic of smart contracts reduces human intervention, but if the technology itself has defects, it will bring even greater mistakes. Therefore, how to ensure the code security of smart contracts has become an important prerequisite for promoting its in-depth application in the auditing field (Desplebin et al., 2021).

In order to tackle these issues, the industry is considering realistic measures. Blockchain and layered hybrid designs to strike the optimal balance between efficiency and control, integration of cryptographic solutions like the use of zero-knowledge proof to ensure privacy on verification, and industry coalitions and standard-setting strategies co-sponsored by major corporations, regulatory bodies, and technology providers are possible courses of action (Zheng, 2025). In this perspective, the cooperation between policymakers, auditors, standard-setting organizations, and technology creators should be improved in order to resolve the central problems of the regulatory adaptation, technical standards, and ethical norms together (Handoko et al., 2024). In this only manner, the blockchain technology can really transform the auditing sector and construct a new generation of auditing ecosystem which will be efficient, transparent, trustworthy, and secure.

8 Conclusion

To sum up, blockchain technology has improved the effectiveness, reliability, security, and transparency of auditing. Blockchain effectively overcomes critical issues including the preservation of audit evidence, ineffective processes, and the challenge of cross-institutional collaboration due to its implementation of an unchangeable audit evidence chain, automated processes driven by smart contracts, and the provision of a decentralized data platform with multi-party cooperation. In addition, the combination of blockchain technology with artificial intelligence, big data analytics and natural language models will enhance the capabilities of risk monitoring, financial fraud detection and continuous auditing.

Nevertheless, even though the potential of blockchain technology is considerable, there are a number of barriers to a widespread adoption including scalability, the ability to integrate it into the current audit and enterprise information systems, regulatory and standard compliance, and organizational adoption. To overcome these issues, it will be necessary to closely engage in cooperation between third party auditing organizations, different company divisions, regulatory bodies, and technology providers that will help create unified technical standards, make clear regulatory policies, and increase the willingness of all the organizations to implement this technology.

With the further development of blockchain technology, it will play an ever-increasing part of enhancing the quality of audits and real-time compliance supervision. Further practice and investigation ought to be aimed at industry-level pilots applications, flexibilities changes of auditing standards and regulations, and the development of blockchain auditing professionals. Through systematic responses to these issues, blockchain technology is expected to drive the construction of a new generation of auditing ecosystem that is more transparent, efficient, trustworthy, and capable of forward-looking risk response.

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