The logistics industry is almost a stranger to blockchain technology when compared to most other sectors. Despite the obscurity surrounding the new technology, it is steadily permeating every industry, including banking, finance, and real estate. Its most popular applications have been in the field of cryptocurrency. However, various other sectors are realizing its potential in securely managing data. The distributed ledger technology of blockchain offers robust possibilities for the logistics sector, especially in the freight auditing process.
Blockchain has no centralized database, and digital signatures secure the authenticity of every transaction. The decentralized nodes in the blockchain network authorize the transactions after confirming the balance of the sender. It leverages public key cryptography to manage and verify the identities. The transaction details are embedded in digital code and stored in transparent, shared databases. The information is immune to deletion, tampering, and revision, and every transaction has a digital record and signature that has to be identified, validated, stored, and shared.
Since it is inherently resistant to the modification of stored data, its applications in the auditing process look promising. The shared ledgers can serve as transparent platforms to record the transactions between two parties in a verifiable manner. It can serve as a source for verifying past transactions. It eliminates the need for clients to procure bank statements or leverage third-party confirmations. Auditors can seamlessly verify the transactions on public ledgers, completing the process quickly and cost-effectively.
The transactions conducted using blockchain take considerably less time when compared to the conventional approaches. A low-value transaction might take up to ten minutes to be validated, and a high-value transaction might take an hour at most. In comparison, the traditional methods of transactions might take up an entire month to be cleared. The real-time verification function facilitated by blockchain technology will also enable audit firms to perform continuous assessment throughout the audit period, instead of conducting year-end assessments.
The development of blockchain technology in the freight auditing sector might also lead to an automated auditing process, streamlining the assessment of various financial statement assertions such as existence, occurrence, and accuracy of information. It will also enable the logistics sector to overcome the transparency challenges, which often hinder client trust. It will allow the organizations to take full control of their process while also ensuring the enhanced customer experience.