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US FDA Partners With IBM and Walmart to Improve Drug Supply Chain Using Blockchain

The U.S. Food and Drug Administration teamed up with four major global companies to boost drug supply chains with blockchain.

The United States Food and Drug Administration (FDA) has partnered with four global high-profile firms to apply blockchain in the drug supply chain, tech media outlet ZDNet reports on June 13.

The FDA has reportedly teamed up with companies including IBM, Walmart, Big Four auditor KPMG, and the world’s oldest pharma firm Merck in order to build a proof-of-concept (PoC) blockchain network to share and track data on distribution of prescription drugs.

According to the report, the initiative is connected with the United States Drug Supply Chain Security Act (DSCSA) and intends to assist the FDA — as well as other pharmaceutical organizations — in optimizing the supply chain of pharma products.

Specifically, the project’s participants aim to speed up the process of tracking inventory, as well as providing accuracy of data shared between members of the supply chain and the integrity of products.

Mark Treshock, IBM’s global solutions leader for Blockchain in Healthcare & Life Science, emphasized that blockchain technology not only enables an efficient basis for tracing pharma products on supply chain, but also allows for the tracking of connections between network participants without revealing the data itself.

The FDA first revealed its plans to apply blockchain technology to enable a digital drug supply chain platform in February 2019, expecting to launch the technology-enabled platform by 2023.

Recently, Cointelegraph reported that as much as 44% of healthcare organizations in Europe have never heard of blockchain applications’ benefits. Meanwhile, EMD Serono, the North American biopharmaceutical business of Merck KGaA, has recently teamed up with blockchain firm Nebula Genomics to create a blockchain platform for generating and sharing genomic data.

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Big Four Firm KPMG Identifies Top Four Skills Required for Blockchain Career

Big Four auditing firm KPMG has identified the top four skills needed for a blockchain-related career.

Big Four auditing firm KPMG has identified the top four skills needed for a blockchain-related career, in a press release shared with Cointelegraph on May 16.

KPMG suggests that an increasing number of companies will investigate blockchain technology this year. “Blockchain projects will not succeed or scale without a multifaceted team that goes beyond technologists,” the firm states, thus identifying the four major skills needed for a career in the industry.

KPMG argues that the successful deployment of blockchain tech depends on professionals with both technology literacy and business acumen.

The latter purportedly requires a deep understanding of specific processes in business, which is essential when developing and defining a highly-demanded use case and value proposition for a project.

The importance of technological literacy lies in the understanding of how blockchains actually operate. KPMG said it is critical to understand how to apply that knowledge to a specific use case.

KPMG suggests that professionals in the field should have data analytics skills in order to understand and apply data derived from a blockchain, in addition to a “hacker mentality,” which requires teams to be open and able to explore and experiment by “hacking the problem” from multiple perspectives.

Earlier this year, KPMG released a survey showing that 48% of C-level executives believe blockchain is likely to change the way they do business in the next three years. When asked about the possibility of implementing blockchain in their companies, 41% of respondents said they are likely to use the technology. As for advantages and disadvantages of the decentralized technology, 23% of respondents believe that blockchain helps improve business efficiency.

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PwC is Top Recruiter for Blockchain-Related Jobs on Indeed, Big 4 Auditing Firms Follow

Big four auditing firm PricewaterhouseCoopers (PwC) is the top recruiter for blockchain-related jobs on recruitment platform Indeed.

Big four auditing firm PricewaterhouseCoopers (PwC) is the top recruiter for blockchain-related jobs on recruitment platform Indeed, search results showed at press time on March 30.

At press time, PwC is responsible for 40 blockchain-related job offers on the platform. Other big four auditing firms are apparently recruiting professionals in this niche on the platform: more precisely, Ernst & Young posted 17 such announcements, while Deloitte posted 10.

This leaves Klynveld Peat Marwick Goerdeler (KPMG) as the only big four auditing firm not recruiting blockchain professionals on the platform. Tech giants IBM and Oracle posted ten job offers related to blockchain as well, while global management, consulting and professional services firm Accenture posted 11.

This last company, Accenture, is also already a user of distributed technology. In November last year, Accenture deployed a distributed ledger technology platform created to manage and track software licenses.

As Cointelegraph recently reported, a blockchain and financial partner at PwC France declared that central banks should leave issuance of digital currencies to corporations such as Facebook and JPMorgan.

In February, news broke that Accenture is working with major global firms including Mastercard to introduce a blockchain-based circular supply chain.

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KPMG: Blockchain Funding in US This Year Has Already Surpassed 2017's Total

Investment in the blockchain industry is booming in the U.S., according to “Big Four” auditing firm KPMG.

Published Tuesday, the company’s “Pulse of Fintech 2018” report states that traditional venture capital investments in U.S.-based blockchain companies in the first half of this year have already exceeded the total for 2017, though it did not specify numbers.

The impressive half-yearly figure was led by $100 million-plus funding rounds achieved by consortium startup R3 and crypto investment startup Circle Internet Finance, the report adds. According to CoinDesk’s Bitcoin Venture Capital Tracker, Circle raised $110 million this year in a Series E round, while R3 raised $107 million.

KPMG U.S.’s Financial Services Digital and Fintech Lead Safwan Zaheer said in the report that “there’s more VC flow available than opportunities to invest — a sign of tremendous growth in the space.”

He added:

“In particular, investments in blockchain doubled the first half of 2018 compared to 2017. Blockchain has the potential to transform banking and if banking systems were to be rewritten today they would be based on blockchain.”

The spike in blockchain investment can this year is attributed in the report to various factors, including the “widespread applicability of blockchain to help harness efficiencies within financial institutions.”

The report states:

“Blockchain’s capabilities extend from recordkeeping and the registration of transactions to documentation management and supply chain management. While it has primarily been looked at from a banking and insurance point of view to date, the reality is blockchain opportunities abound and could enhance processes for any number of US and global businesses.”

KPMG concluded that it expects that blockchain – alongside so-called regtech and insurtech – will only gain momentum going forward.

As well as compiling research data on blockchain, KPMG has also been putting its money where its mouth is on the tech.

The Netherlands-based giant recently joined a trial project alongside the three other major auditors and 20 banks in Taiwan to trial a blockchain service for auditing public companies’ financial reports.

The company has previously told CoinDesk that blockchain could be an “antidote” to the high cost of regulation.

KPMG building 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.

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KPMG Report: US Blockchain Investment in 2018 to Date has Outstripped 2017’s Total

Fresh analysis from KPMG shows that blockchain investment in the U.S. in the first half of 2018 has exceeded the overall total seen in 2017, according to its biannual “The Pulse of Fintech” report released today, July 31.

KPMG is one of the world’s largest auditing firms, collectively known as “The Big Four” — alongside Deloitte, Ernst & Young and PwC.

KPMG suggests that blockchain tech is “moving beyond experimentation” to draw “significant” attention from investors in the first two quarters of 2018, noting that investments were typically more focused on experienced firms and consortia that sought additional rounds of funding, rather than on market entrants.

The report singles out peer-to-peer (P2P) payments firm Circle’s $110 million round led by mining hardware giant Bitmain and $77 million for crypto wallet Ledger in France as among the “good-sized” funding rounds in Q1 2018. It highlighted that the U.S. has already seen total investment in blockchain outstrip the annual total posted in 2017.

Other key blockchain takeaways from the report include the fact that the banking consortium R3 has expanded its mandate to include insurance companies, while major insurance consortium B3i has reorganized in order to commercialize its outputs. New blockchain consortia have continued to “crop up,” in particular those that are focused on developing blockchain-powered supply chain management solutions.

As regards initial coin offerings (ICOs), KPMG notes that the industry continues to flourish “despite” high-profile blanket bans on the fundraising model by countries such as China. The report draws attention to Cayman Islands-based EOS developer Block.one completing its year-long token sale in Q1 2018 to raise an industry record-breaking $4 billion.

The report also highlights impressive investments in U.K.-based challenger bank Revolut ($250 million this April), which added an option to transact in crypto in December 2017, and brokerage app Robinhood, “which raked in one of the largest deals in the first half of 2018” — $363 million in May to expand its crypto trading platform U.S.-wide.

In the wider fintech landscape, KPMG indicates that U.S.-based fintech firms have seen a surge in venture capital (VC) funding — exceeding $5 billion in the first half of 2018. Across VC, private equity (PE) and mergers and acquisitions (M&A), global fintech performance has been “exceptional,” exceeding the 2017 annual total and ”well on pace to exceed 2015’s peak.”

A report released by Crunchbase news in February anticipated that global VC fundraising for blockchain-based companies is well on track to exceed 2017 figures, noting at the time that the U.S. was ahead of other countries in investment figures.

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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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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.

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Auditor KPMG Says Regulators Need ‘Up-to-Date’ Standards for Money Laundering in Crypto

Major global auditing and consulting firm KPMG has published a study focused on financial crime in Switzerland, with a section on cryptocurrency’s role, Cointelegraph auf Deutsch reported June 28.

KPMG devotes a section of their study to the role of cryptocurrency in money laundering and financial crime, illustrating methods used to launder money via digital currency. In the text addressed to financial institutions, KPMG also lays out tips on how to tackle the phenomenon.

According to KPMG, money laundering can be accomplished by buying cryptocurrency at an exchange or by cash or debit card at cryptocurrency ATM using the services of accomplices who have clean records, corroborated employment and an impeccable online profile. KPMG’s report states:

“Launderers use mixing (or tumbling) services to swap primary coin addresses for temporary digital wallet addresses to fool the blockchain and break audit traceability. Another tactic uses false receiving addresses to re-route transactions to backup addresses, also breaking the audit trail. Mixed primary coins are then transferred to an advance digital exchange to purchase privacy coins.”

Given the specific nature of money laundering via crypto, KPMG argues that banks can no longer rely on traditional anti-money laundering tactics.

KPMG proposes that financial institutions and regulators work together to more effectively combat money laundering, stating:

“Regulators must develop more up-to-date, focused standards that deal with the challenges of this rapidly evolving area. And financial institutions must take responsibility for ensuring their systems and processes are capable of mitigating the risks insofar as possible.”

The phenomenon of using crypto to launder money has long been used to criticize cryptocurrency. In April, major crypto exchange Bitfinex was accused by Polish prosecutors of having “ties” to money allegedly laundered and seized in a Polish bank.

The G20 countries discussed the subject of crypto used for money laundering at their meeting in March 2018 with the intent to develop common regulations globally.