Bringing the European Court of Auditors into the World of Blockchain
For the past months, the Compellio team has been working with the European Court of Auditors (ECA) to implement the “ECA Registry”, a novel platform that will enable ECA to use public blockchains in order to apply audit-by-design principles and induce transparency towards businesses, end-beneficiaries, institutions, and EU citizens.
Disclaimer: The opinions expressed in this article are the author’s own and do not reflect the view or any endorsement by the European Court of Auditors.
Set up phase
During the first stage of this collaboration, we focused on analysing the value drivers, describing the requirements and identifying meaningful use cases to implement blockchain in the field of audit.
Value drivers for ECA
- Reduce admin burden
- Mitigate coordination costs
- Free up time for auditors to focus on their added-value work
- Induce transparency towards businesses, end-beneficiaries, and EU citizens
- Build technical capacity and practical know-how
- Collaborate with other international and EU institutions in accelerating early-adoption of this innovative technology
Requirements by ECA
- Obtain quick results
- Show concrete use cases in the audit field
- Develop a web-based service with an intuitive interface
- Rely on public, permissionless blockchains
- Ensure interoperability between public blockchains and ECA’s internal IT infrastructure
Use cases
By forming a multi-disciplinary working group inside ECA, we managed to quickly identify, assess and analyse use cases where blockchain could have a meaningful impact.
The 5 use cases that were shortlisted were the following:
Audit
1) Audit on EU-funded training programs
2) Audit in the domain of agriculture
Public procurement
3) Public procurement by EU institutions
4) Procurement by EU beneficiaries
Publications
5) Protection of ECA publications
Implementation phase
We were positively surprised by how fast the project advanced inside a supposedly “conservative” institution like the European Court of Auditors. During 3 months, we were able to design, test, and roll the ECA Registry into production.
The ECA Registry
The ECA Registry allows users to register imprints of digital files on public blockchains, verify their authenticity, and create a secure audit trail.
- It acts as a notarisation service
- It keeps the link between imprints of files and their metadata
- Files and metadata are kept off-chain, in a private storage; only imprints are recorded on-chain
- It allows for bilateral exchange of imprints with third parties, in a GDPR compliant manner
A detailed overview of the ECA Registry can be found in the following Youtube video by ECA:
Key considerations on the current state of Blockchain and Distributed Ledger Technologies
Current trends
- More and more organisations adding “blockchain” to their name to capitalise on the hype
- ICO fundraising surging in 2018
- Blockchain-based services evolving with speed in developing countries and inside organisations with strong audit/assurance needs
Road forward
When we move past the cryptocurrencies to focus on areas where blockchain can have a company-wide impact on organisational performance and operations, there are some issues that require a more sensible consideration of the promises of this technology and its growth potential from early adopters to the mass market.
We tried to put a few of those considerations in the bullets below:
- Immutability and governance in public vs private DLTs
- Scalability and sustainability of fully on-chain systems
- Reverse usability mentality (i.e. finding problems for the solution vs finding solutions to the problem)
- Interoperability (i.e. how to use blockchain without obliterating existing IT infrastructures and investments?)
- Highly technical interfaces and complex user experiences
- Lack of specialised human resources (appx. 10.000 blockchain developers in the world out of appx 21mil software engineers in total)
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Image Credits: Photo by Johannes Plenio
