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Blockchain Startup Founded By Deloitte Vets Unveils Supply Chain Platform

A blockchain startup headed by a group of former Deloitte employees is launching a new supply chain platform.

Citizens Reserve announced the SUKU ecosystem on Wednesday, positioning it as “an industry agnostic supply chain solution” that seeks to improve how shipments are coordinated and tracked around the world. As far as technology goes, SUKU will leverage both the ethereum and quorum blockchains.

Separate from the company’s previously reported Zerv network, SUKU aims to provide trading partners with real-time data on the location of goods, along with functionality that lets them use a bid-and-order marketplace and create automated contracts. At the same time, the platform is designed to offer privacy to those users, and will effectively serve as a “supply chain-as-a-service” hub.

CEO Eric Piscini, Deloitte’s former global blockchain lead, said in the announcement that recent events have proven the need for improved supply chain systems, citing this summer’s pharmaceutical scandal in China as one example.

He added:

“The current supply chain environment is complex and difficult to navigate. Almost all enterprises require a supply chain to some extent, but the technology supporting them remains expensive, inefficient and fragmented.”

The SUKU decentralized supply chain platform will be built to work across different industries, Piscini said, “enabling our trading partners to interact in a way that’s been all but impossible up until now.”

As envisioned, SUKU would use the ethereum component to run its smart contracts, with the terms of a transaction stored on the blockchain and payments automatically executed as the requisite criteria are fulfilled. The quorum blockchain would be permissioned, acting as a private marketplace for vendors and bidders.

An accompanying SUKU token will be used to reward the platform’s partners and serve as the basis for an incentive mechanism.

Shipping yard image via Shutterstock

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Deloitte 2018 Survey: Blockchain “Getting Closer to Breakout Moment Every Day”

“Big Four” auditor Deloitte’s 2018 blockchain survey, published August 27, reveals that the technology is gaining significantly – if unevenly – in traction at the executive level of enterprises across diverse industries.  

Deloitte’s survey polled a sample of just over 1,000 senior executives in seven countries – Canada, China, France, Germany, Mexico, U.K., and the U.S. – at companies with $500 million or more in annual revenue.

As Deloitte notes, the survey notably focused on “blockchain-savvy” execs from so-called “digital enterprises” rather than startups – i.e. on businesses faced with implementing “legacy-constrained” blockchain solutions, rather than on “emerging disruptors” whose business models have been inspired by blockchain at their inception.

74 percent of all the respondents to the survey said their executive team believes there is a “compelling business case” for use of blockchain technology, with 34 percent saying that some form of blockchain deployment was already in process within their organization.

Another 41 percent of respondents said they expect their organizations to deploy a blockchain application within 12 months, with nearly 40 percent reporting that their organization will invest $5 million or more in blockchain in the coming year.

Deloitte gives the following interpretation of the survey’s results, which it noted revealed some asymmetries and uncertainties as to the current state of blockchain at a legacy enterprise level:

“Ultimately, [blockchain is] more of a business model enabler than a technology…for legacy organizations…we’re starting to see a change in approach toward blockchain. Executives in these organizations are moving away from the pure platform view of “What is it?…let’s find a use case” toward development of more sensible, pragmatic business ecosystem disruption.”

Deloitte considered that a certain lag in fully grasping that “blockchain represents a fundamental change to their business” in part explains why the percentage who see a “compelling business case” (74 percent) for the technology is more than double the percentage of those who have actually already initiated its deployment (34 percent). Moreover, the report noted that:

“Adding to the uncertain state of blockchain adoption is the fact that while more than 41 percent of respondents say they expect their organizations to bring blockchain into production within the next year, 21 percent of global respondents—and 30 percent of US respondents—say they still lack a compelling application to justify its implementation.”

While the survey found that this residual “platform” view of blockchain is still to some extent impeding innovation and adoption at scale, it also found that regulatory concerns accounted for 39 percent of respondents’ rationale for not accelerating greater investment in the technology. Difficulties in adapting legacy systems accounted for a further 37 percent.

Nonetheless, from a longer term perspective, 84 percent of all respondents “somewhat or strongly agreed” with the statement that “blockchain technology is broadly scalable and will eventually achieve mainstream adoption.” Across the oil & gas, food, tech/media/telecom, consumer products & manufacturing, and automotive industries, 80-87 percent of executives ranked their knowledge of the technology as being within the excellent to expert range.

                Deloitte itself affirmed its overview as being that “the only real mistake we believe organizations can make regarding blockchain right now is to do nothing,” considering that adoption is “getting closer to its breakout moment every day.”

Earlier this spring, another Deloitte report into blockchain focused on the retail and consumer packaged goods (CPG) industry, similarly strongly concluding that those businesses who do not at least consider the technology’s possibilities are “at risk of falling behind.”

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Deloitte: Tech and Telecom Execs Plan to Invest Millions in Blockchain

A new survey from Deloitte found that 40 percent of executives from the telecom, media and technology (TMT) space want to invest millions in blockchain research during the next year.

Published Tuesday morning, the findings – included in a report from the Deloitte Center for Technology, Media & Telecommunications – form part of a wider look into how the technology could be applied to those business sectors.

To that end, the researchers behind the report surveyed 1,053 executives in seven countries, including 180 from TMT firms. They found that 84 percent of all respondents “believe that blockchain will broadly scale and reach mainstream adoption.”

Roughly 59 percent say they think blockchain could disrupt their specific industries, and 29 percent of all respondents have “already joined a blockchain consortium,” according to the report.

Further, overall interest in blockchain has grown as well, according to Deloitte’s findings. The firm predicted that revenue for blockchain companies would grow from $340 million in 2017 to as much as $2.3 billion by 2021.

Deloitte’s report included other data points highlighting the interest on the financing side of things. In the first six months of 2018 alone, venture capitalists have funded blockchain startups to the tune of $1.3 billion.

Developers are also increasingly looking into the technology, the report found, saying that “since 2009, the number of blockchain projects on the open-source development platform GitHub has grown significantly.”

In 2016, developers produced 27,000 new projects, according to Deloitte.

Deloitte image via Lester Balajadia / Shutterstock

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Singapore Central Bank Partners With Deloitte, Nasdaq on Blockchain Asset Settlement

The de facto central bank of Singapore announced it had signed a deal with multiple big name entities to ease digital asset settlements in a press release Friday, August 24.

Part of its ongoing Project Ubin blockchain integration scheme, the Monetary Authority of Singapore (MAS) partnered with Singapore Exchange (SGX), along with Anquan, Deloitte and Nasdaq to deliver the enhancements.

Together, the parties will create “Delivery versus Payment (DvP)… capabilities for settlement of tokenized assets across different blockchain platforms,” with the latter three acting as technical partners.

“This initiative will deploy blockchain technology to efficiently link up funds transfer and securities transfer, eliminating both buyers’ and sellers’ risk in the DvP process,” Tinku Gupta, head of technology at SGX and leading the project explained.

“This is a collaborative innovation bringing together multiple players to pursue real-world opportunities that will benefit the ecosystem.”

MAS has continued to make positive steps to creating a cryptocurrency-friendly jurisdiction in Singapore, expressing cautious optimism about the technology’s future while championing blockchain via Project Ubin, which it has worked on since 2016.

In February, the organization’s chief fintech officer Sopnendu Mohanty said he expected to see “real impact” of the initiative in 2020.

“Blockchain technology is radically transforming how financial transactions are performed today, and the ability to transact seamlessly across blockchains will open up a world of new business opportunities,” he meanwhile added about the DvP plans.

“The involvement of three prominent technology partners highlights the commercial interest in making this a reality.”

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Barclays Sponsors Blockchain Hackathon to Explore Derivatives Contracts Processing

British investment bank Barclays is sponsoring a hackathon to find the best blockchain solution to increase the efficiency of derivatives contracts processing, according to an announcement published August 9. Barclays is partnering with other market majors like Deloitte, the International Swaps and Derivatives Association (ISDA) and Thomson Reuters for the event.

At the two-day DerivHack hackathon, participants will be given an opportunity to implement their ideas and apply the ISDA Common Domain Model (CDM) to distributed ledger technology. The final goal of the event is to find solutions to use cases in post-trade processing of derivatives contracts.

The ISDA CDM provides a standard digital representation of events and processes which may happen in the course of a derivatives trade, presented in a machine-readable format. The product is designed to enhance consistency and aid interoperability across firms and platforms.

Per the announcement, Barclays will lay down challenging use cases to simulate the derivatives market, like an overhaul of derivatives post-trade processing, step-change in efficiency gains, as well as provide sample trade data in the ISDA CDM to implement them.

Earlier this year, there were rumors that Barclays was reviewing the possibility of opening a cryptocurrencies trading desk. An anonymous source reportedly said that the bank was assessing whether client interest was sufficient to offer crypto trading services. Later, Barclays’ CEO Jes Staley refuted the rumors, saying:

“Cryptocurrency is a real challenge for us because, on the one hand, there is the innovative side of it and wanting to stay in the forefront of technology’s improvement in finance… On the other side of it, there is the possibility of cryptocurrencies being used for activities that the bank wants to have no part of.”

In July, Barclays filed two patent applications relating to the transfer of digital currency and blockchain data storage, both published by the U.S. Patent and Trademark Office. The first patent describes a system of transferring digital currency from payer to recipient that would securely authenticate the identities of both, as well as validate and record transactions. The other relates to storing and endorsing data and claims relating to specific entities.

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Barclays Is Pitting Blockchains Against Each Other (For a Cause)

U.K. banking giant Barclays is challenging up-and-coming blockchain coders to help revamp the global derivatives market at a hackathon next month.

Revealed exclusively to CoinDesk, DerivHack will take place simultaneously in London and New York on September 20-21 at Barclays’ Rise accelerator spaces. The International Swaps and Derivatives Association (ISDA), Deloitte and Thomson Reuters are co-sponsoring the event

Those taking part will be asked to apply ISDA’s Common Domain Model (CDM), a set of process and data standards, using their choice of distributed ledger technology (DLT) platform, to efficiently model post-trade processing of derivatives contracts. 

CDM attempts to harmonize the way data is presented and reported across different firms and platforms. As such, its adoption is widely viewed as a prerequisite for the financial industry to adopt DLT and smart contracts.

One goal of the hackathon is to suss out which of the commonly used enterprise DLT platforms – R3’s Corda, Hyperledger Fabric or ethereum – handles derivative life cycle smart contracts most elegantly.

“It’s up to each team to decide what they code on,” Dr. Lee Braine of the CTO Office at Barclays Investment Bank told CoinDesk, adding that it is a “good, and genuinely open, question” which will perform the most efficiently.  

“I think the sort of things that will come out of this hackathon will include exactly that,” he said.

Braine said, by way of an example, there may be cases where existing blockchain platforms benefit from some enhancements to make them more naturally compatible with the CDM.

Referring to object-oriented computing languages such as Java, which use classes to define data formats and available procedures for a given type or class of object, he said, “you could imagine this being equivalent to adding some extra classes to raise the level of abstraction closer to that of the CDM.”

Braine pointed out that the CDM, which is all about how you alter the data structure before and after each life cycle event in a trade (such as an amendment, modification or termination of a contract), will give the judges a neat way to assess those solutions.  

“Because it is the ISDA CDM, it will be very clear what are the inputs and expected outputs for each life cycle event – but it will be up to the hackathon coders to implement the smart contracts using a programming language and platform they think is appropriate,” he said.  

Fresh eyes

For ISDA, the hackathon presents an opportunity to get some feedback from members of the industry (and newbies) about the CDM.

“Following the release of ISDA CDM 1.0, it is important that the model is explored and validated by a broad set of industry participants,” said Clive Ansell, head of market infrastructure and technology at ISDA.

A key component in the standardization of smart contract-enabled post-trade processing of derivatives are smart oracles which pipe in data to the contacts. Thomson Reuters was the first large industry player to launch a smart oracle back in June 2017 with BlockOne IQ.

“Making this capability available during the hackathon is a great opportunity to explore the evolution of standards for blockchain-based financial instruments, as they are a much-needed component in shaping the industry’s future infrastructure,” said Sam Chadwick, director of strategy in innovation and blockchain at Thomson Reuters.

Also, the two intensive days will give participants access to derivatives experts providing guidance on applying the ISDA CDM, said Braine, which should be useful whether the team is a fintech startup looking to implement derivatives smart contracts or a group of students looking to build skills and enhance their CVs.

Summing up, Sunil Challa from the business architect team at Barclays said:

“If the industry is to realize potential efficiencies and reduce costs via the adoption of standards, then there needs to be greater compatibility across different solutions in capital markets.” 

Image via Barclays

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How Blockchain Is Reshaping External Audit: Crypto Developments by PwC, KPMG, EY and Deloitte

The recent initiative of the world’s four largest auditing — Deloitte, Ernst & Young, KPMG and PwC — to join a pilot of 20 Taiwanese banks to test blockchain technology for fiscal audits, confirms how developments are expected in the work of external audit.

Despite the auditors have been sometimes criticized for their lack of capacities for catching issues before they blow up, an external audit is a fundamental part of the assurance environment for international groups, both private and public.

This can be defined as the process of conducting an objective examination of an organization’s accounts, books, documents and internal processes in order to determine whether it presents a ‘true and fair’ situation of financial performance and financial position. It is based on a set of predetermined guidelines — normally the International Financial Reporting Standards or generally accepted accounting principles — to verify the accuracy of companies’ financial statements.

So what is the linkage between an audit and blockchain? What could change in the short term and what might not?

What could change

Albeit regulated by numerous standards and practices, an external audit is often a heavy process that requires a team of professionals to spend a robust amount of time to review the massive number of transactions and accounts of the client’s books. In this scenario, blockchain technology could play a really disruptive role.

As defined by the CFO of International Federation of Accountants (IFAC), Russell Guthrie:

“New technologies, such as blockchain and artificial intelligence  are advancing the global profession, raising the bar and driving demand for new workforce skills and competencies.”

As blockchain has its foundation in the distributed ledger concept and cryptology — which promises transparency, immutability, security, auditability, high cost-efficiency and is ‘ever available’ — an immediate application of blockchain technology in the audit verifications is connected to external confirmation procedures.

External confirmations are a critical part of all the audit processes, as they give the audit team the ability to to check external sources of the information that are provided internally by the company. But what if the ledger of such an enterprise is in a decentralized, public blockchain?

In a scenario like that, the auditors would be able to obtain all the information related to the financial transactions of a company without the need to confirm them through an external confirmation procedure, hence saving time and resources.

An environment where all the ledgers would be easily accessible, cross-checks of transactions would be still possible. If, for example, Company A has a liability with Company B, the auditors or any stakeholders could easily verify whether that is correctly recorded, by cross-checking the respective public ledgers.

Ready-to-access information will also facilitate the review of bank details, where the external auditors examine all the information pertaining to a company and commercial banks, including bank accounts, loans, guarantees and signatory powers.

What will not change

As the scope of blockchain is wide and requires dedicated focus and time to research how best it can be used to build practical applications, the field of business estimation, and related audit activities may require more time to change and to be affected by blockchains. Examples of common accounting estimates are related to the definition of the fair value of an asset, revenue recognition and determination of accruals.

The process of determining an estimation includes elements of uncertainties that are often mitigated by the knowledge of the business, the use of market comparisons and historical data.

In a scenario where blockchain would be widely adopted, and where the transactions are accessible and transparent, the necessity of producing accounting estimate — and the related guesswork from the management of the company and external auditor — will likely decrease.

How the big players are reacting to blockchain innovations

The international audit market is dominated by the so called “Big Four”: PricewaterhouseCoopers (PwC), KPMG, Ernst & Young (EY) and Deloitte, whose revenues, thanks to the economic reprise, have been steadily increasing during the past few years.

Chart

Combined revenue of the Big Four accounting/audit firms worldwide, from 2009 to 2017

(Source: statista.com)

In this dynamic environment, the Big Four are launching specific initiatives that are aimed to increase the efficiency of audit activities and develop assurance tools.

More specifically, in May 2016, Deloitte’s first blockchain lab was created in Dublin, in order to work with international organizations looking to roll out blockchain-enabled solutions across different countries. Deloitte has also recently found that blockchain technology will become a critical asset to the retail and consumer-packaged goods industries.

Ernst & Young (EY) became the first advisory firm to accept Bitcoin for its services. EY Switzerland clients have had the option to settle their invoices for auditing and advisory services using Bitcoin since the beginning of 2017. The same Swiss branch has also announced formal support and membership of the Bitcoin Association of Switzerland (BAS).

In November 2016, PwC launched Vulcan Digital Asset Services to enable digital assets to be used for everyday banking, commerce and other personal currency and asset-related services. The company has also acquired a minority stake ‎in the Chinese startup VeChain. This company uses blockchain technology to protect client brands and products through the creation of a transparent supply chain that allows product verification and traceability.

Pierre-Edouard Wahl, head of blockchain at PwC Switzerland, shared his company’s activities related to blockchain with Cointelegraph:

“We have a pretty broad service offering: we work with startups, we work with established companies, we offer — I would not say full services yet, because there would still a lack of clarity, but we want to offer first inspections to ensure that things have been done correctly and hopefully that will enable us, if the regulators allow us to do that, to interfere. For PWC Switzerland, where we have big clients who offer cryptocurrency to their clients, we need to find a way to audit that. But we have ways to make sure that funds are in the control of the right people. We also work on the infrastructure level, we work with a lot of ICOs globally. We offer legal tax services, insuring services, engineering services, some kind of review for code — I do not like the word audit there because it makes that sound like it is bullet-proof, which is just reviewed by another pairwise.”

In September 2016, KPMG launched its Digital Ledger Services — a suite of services designed to help financial services companies realize the potential of blockchain. And in November 2017, KPMG signed on as a corporate member of the Wall Street Blockchain Alliance (WSBA).

The Future of auditing

While blockchains could foster the efficacy of the audit activities in certain key areas and reduce the need of performing existing audit procedures, there is still the need for the external auditors to use their professional judgement in many areas of the financial statement, especially when determining accounting estimates.

As Marcel Stalder, CEO of EY Switzerland, confirmed:

“It is important to us that everybody gets on board and prepares themselves for the revolution set to take place in the business world through blockchains.”

As a result, further developments are expected, with new procedures to address the risks associated to the blockchain environment. These developments will likely reshape the work of external audit, where review of public ledgers and IT controls will gain a more crucial role, in assuring that financial statements present a ‘true and fair’ situation of companies’ financial performances.

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World's Top Four Auditors Join Taiwan-Led Trial for Blockchain Fiscal Audit System

The world’s four largest auditing firms — Deloitte, Ernst & Young, KPMG and PwC —have joined 20 Taiwanese banks to pilot blockchain technology for fiscal audits, local news outlet CTEE reports July 19.

The “big four” will join a consortium of major Taiwanese banks to test a blockchain solution for auditing companies’ interim financial reports, focused on streamlining so-called ‘external confirmation’ processes. These currently require an auditor to manually obtain and verify audit evidence of companies’ transactions with third parties.

The pilot — which has been developed by the banking consortium alongside Taiwan’s Financial Information Service Co. (FISC) — harnesses the tamper-proof, distributed, and immutable structure of a blockchain system to secure and automate the confirmation process, potentially allowing auditors to assess the fiscal health of firms in record time.

The banks will act as validators to migrate companies’ transaction data onto a blockchain that will subsequently be accessible by the participating audit firms. The FISC anticipates that the new system will accelerate confirmation times from an average of two weeks to “within a day.”

Expansion of the trial system is planned for more than 1,400 publicly-listed companies in China starting next year.

This spring, Cointelegraph reported on a major Deloitte study that argued that businesses who don’t consider integrating blockchain systems are “at risk of falling behind,” predicting that it would become “a standard operational technology across the financial, manufacturing and consumer industries” in the future.

For its part, PwC has also kept its pulse on the crypto and blockchain space. The company released a joint report with the Swiss Crypto Valley Association just two weeks ago indicating that Initial Coin Offerings (ICOs) are thriving in 2018, with their volume thus far already twice as high as it was during the entirety of 2017.

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All 'Big Four' Auditors to Trial Blockchain Platform for Financial Reporting

The world’s four biggest auditing firms – Deloitte, EY, KPMG and PwC – are joining a group of 20 banks in Taiwan to trial a blockchain service for auditing public companies’ interim financial reports.

According to a local news report on Thursday, the blockchain trial will initially allow the auditing firms to conduct so-called external confirmation – the process of obtaining and evaluating audit evidence – for a group of selected companies that are publicly traded on the island.

Traditionally, external confirmation is conducted manually by auditing firms to verify the authenticity of public companies’ financial transactions with third parties.

Developed by Taiwan’s Financial Information Service Co. (FISC) together with the 20 banks, the new platform moves the public firms’ transaction data onto a blockchain, where the banks participate as validators.

The goal is to allow auditing firms to view the transactions through a traceable and tamper-proof chain of data in distributed manner, streamlining and automating the confirmation process. FISC expects the new technology to reduce the confirmation time from typically “half a month” to “within a day.”

Initially founded by the island’s Ministry of Finance as its information technology arm, FISC was later incorporated as a company with both private and public capital.

The firm announced its move into blockchain in January 2017, together with the 20 major banks, as part of a wider effort to revamp financial technologies in Taiwan. The firm said in the report that, following the trial, it expects to roll out the auditing service to the 1,400 public companies listed on the island next year.

Receipts image via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.