Big Four service giants preparing to become Crypto and Blockchain auditor

Accounting firms set up to cater their services to Crypto firms while keeping up with the prompting market demands. Big brands like EY, PwC, and KPMG have clients that are into crypto or blockchain technology requiring business advisers from established names.

To satisfy the hunger of the client’s traditional firms have started recruiting people with deep knowledge of blockchain technology to provide better services to the clients. EY Is called reading dealing with around 150 clients around the globe who are involved in digital assets for blockchain technology. These include mining farms, exchanges, and more traditional companies using blockchain tech.

A spokesperson for EY, Jeanne Boillet, spoke about the decision to offer crypto auditing services: “It’s a no brainer… We have no choice but to address this because some of our clients have invested in that space.” Ralph Weinberger of PwC also commented “We are in the midst of a rather significant effort… We are devoting significant resources to how we might provide audit services in not just cryptocurrency, but blockchain.”

Henri Arslanian, PwC’s global crypto leader stated “Although Bitcoin was designed with a trustless ideology, the reality is that the industry still requires trusted entities to catalyze the development of the ecosystem.”

At the time when Arslanian joined PwC many people were not aware of Crypto. As time passed he witnessed a massive growth of Crypto among people. They started from Hong Kong, the acceptance of Bitcoin for payments from clients, and now has expanded to 20 countries with a team of 200 professionals working on Crypto projects. “Just within the cryptocurrency sector, we’ve conducted over 350 engagements in the last 18 months,” Arslanian said.

Arslanian explained: “Over the last couple of months, we’ve expanded our work. We recently closed the first-ever crypto fundraising deal at PwC, in which we led a $14 million Series A round for a Swiss-based crypto firm with Asian family offices. We are also the auditor for BC Group, a publicly listed crypto company in Hong Kong.” The Financial Reporting Council in the UK stated, “In the absence of specific guidance, there is a risk that diverse accounting practices will develop and become entrenched.” David Lyford Smith of the Institute of Chartered Accountants commented “It’s really about the proper careful application of current rules and reading the lines between what fits and what makes sense… But that does lead to some disagreements about what’s the best treatment.”

The Crypto market will grow up to $21 million in the coming five years. These big accounting firms are all gearing up to provide the best services to their clients and hiring blockchain professionals. Not only that, but the top 500 Fortune companies are also partnering with blockchain and crypto companies.

Why do we need audits?

BC Group CEO, Hugh Madden said that “Auditing, like regulatory clarity, provides confidence to all stakeholders that companies are operating transparently and adhering to expected industry standards. As the business of digital assets continues to grow and mature, and compliance and regulatory standards become more robust, auditors will continue to play a pivotal role.”

Audit includes valuation methodology and proof of control, covering both cash and digital assets along with independent verification of financial records against public blockchain data.

In 2020 a survey by KPMG and Forbes Insights revealed that 79% of these professionals expect their auditor to provide an understanding of blockchain’s impact on their business or the financial reporting environment. KPMG United States blockchain audit leader, Erich Braun stated that “SEC issuers will want to design blockchain technologies to support the entity’s internal control over financial reporting. Being able to demonstrate how these technologies achieve their objectives in a well-controlled environment is critical to a successful blockchain strategy. If the technology is not auditable, the immense benefits it brings, such as increasing efficiencies and cutting costs, may not be realized.”

KPMG offers several blockchain-based software solutions. The projects majorly include defining blockchain strategies, participant onboarding, and governance and operating models. Previously it has helped Microsoft, Tomia, and R3 create a blockchain solution for the telecom industry in preparation for 5G networks.

Arun Ghosh, KPMG’s U.S. blockchain lead mentioned that “In the coming years, we expect growth in enterprise blockchain and network-based models that support ‘COVID safe’ supplies, identities, and products. This is already being seen as there is increasing intersectionality with other technologies like IoT, AI, and Machine Learning.”

EY has also collaborated with Microsoft and ConsenSys to develop an open-source blockchain project called Baseline Protocol, which runs on the public Ethereum mainnet.

Back in 2018 Accenture partnered with Digital Ventures, a fintech subsidiary of Thailand’s Siam Commercial Bank, to launch a distributed ledger technology solution to simplify the way companies buy and sell goods and obtain financing. Recently Accenture collaborated with Fujitsu on an open-source software development kit called Hyperledger Cactus, which is designed to solve blockchain interoperability challenges. Along with that, these service providers disclosed detailed reports on blockchain and digital assets. PwC recently published their 2020 Crypto Hedge Fund report, which shows the total assets under management of crypto hedge funds globally increased to over $2 billion in 2019, as compared to $1 billion from the previous year. Likewise, another report was released by Deloitte Along with the World Economic Forum. The report stated that blockchain technology is created for a particular industry ecosystem And it would work in full power if all are linked under a single framework.

Tegan Kline blockchain business Development professional and an investment banker mention that “Providing accounting services for crypto clients and businesses is a good place to start. But we have seen a lot of centralized players try to innovate in the blockchain space and many of them miss the point, as they try to keep control by creating centralized, private blockchains.”

Well, it’s too early to presume that these giant professionals will be four fronting blockchain technology and innovation. This is a swan event that does not text to a particular place or area but rather keeps on changing. Companies that are adaptive and agile can be a better fit for this technology and we will be witnessing a shakeup when it comes to the players included in the Big Four.

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Big Four service giants preparing to become Crypto and Blockchain auditor

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Written by Shivalikrishali