Problem Description

The topic is suggested by Abendum (https://abendum.io/)

Background: The Auditor collects audit evidence to give reasonable assurance as to whether a client's financial statements are free from material misstatement. To do this the auditor forms his/her own independent opinion based on information collected in the audit. Audited financial statements are deemed to be trusted. An auditor verifies financial information by checking receipts, invoices, bank statements and payment records as well as the timeline of the documents, since the time of a transaction and transfer of risk and control affects when revenue and expenses are recognized. Thus, a central activity for an auditor is the verification of records. Verification means "proving the truth" or "confirmation". To increase efficiency and quality, Audit Data Analytics (ADA) can be used. When using ADA, the trustworthiness of data points that the analytics is built upon is of high importance. Verification is time consuming and expensive since the auditor must contact persons, companies and banks to verify the records. The digitalization of logistics and supply chain operations gives transparency to the actual operations of a company, and since the financial statements are a result of logistical operations the new transparency can be used to automate the provision of strong evidence of financial records. Transparent operations will not only improve the documentation quality of the financial data, but also provide more and better structured non-financial data to be used in the audit risk assessment and ADA. Triple Entry Accounting is a new emerging technique that supports automated verification of integrated accounts, this achieved by both parties of a transaction digitally sign the underlying invoice or receipt. It extends the classical double entry bookkeeping by using a common shared & encrypted ledger in the form of the public blockchain, resulting in a triple entry accounting system. This system lowers costs by delivering reliable and supported accounting, it makes much stronger governance possible in a way that positively impacts on the future needs of corporate and public accounting. This master thesis will study how logistical information can contribute to verify financial records and provide relevant & reliable nonfinancial data by the use of Triple Entry Accounting.

Problem: Auditors need too much time to gather sound evidence to form an opinion about the financial statements. Cross-border transactions are especially difficult to inquire for and authenticate.

Solution: Currently manually handled invoices, receipts, vouchers, contracts etc. can be generated with a QR-code, facilitating for an easy on-chain digitally signed attestation from both parties of a commercial transaction by the use of a mobile phone. Plug-in integration with an Accounting/ ERP system can help automate the process for professionals. From an audit perspective, the solution gives solid evidence material for the completeness and validity of financial transactions. Both parties of a transaction can simply scan & authenticate themselves with the transaction. Even simpler with the Plug-in integration.

Students: This thesis is suitable for students with knowledge of financial accounting, logistics and supply chain management and digital signatures. The thesis might be in cooperation with faculty and master students at Norwegian School of Economics (NHH).

Advisors: Project Architect Torje Vingen Sunde torje@abendum.com, +47-975 01 075

Supervisors: Associate Professor Bjørn Jæger bjorn.jager@himolde.no and Associate Professor Oddbjørn Sættem Oddbjorn.Sattem@hiMolde.no

2020-2021 Master Thesis

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