Blockchain Facilitates Audit Innovation, Digital Intelligence Empowers High-Quality Development

Zhou Xiaodong

(Guangdong Technology College, School of Accounting, Zhaoqing, Guangdong 526100, China)

I. Introduction

Strengthening and standardizing internal corporate controls are essential for enhancing enterprise management levels and risk prevention capabilities, as well as promoting sustainable corporate development. Internal control is established to achieve management objectives and organize internal operational activities among various functional departments through methods, procedures, and measures for organizing, constraining, assessing, and regulating business activities.

In the digital-intelligence era, market competition intensifies in the business world, and various risks are ubiquitous. To prevent risks before they occur and resolve them in a timely manner, it is essential to advance the construction of internal controls within enterprises. Through training and education, all levels of management and even all employees within the enterprise should conceptually recognize and identify with internal controls in corporate governance, comprehensively and deeply understanding its necessity and important role for enterprises, establishing timely and efficient operational systems that can achieve high performance and risk control, as well as being able to operate across all business segments of the enterprise, and effectively implemented in the work of all departments and positions.

In October 2019, during a collective study session of the Political Bureau of the CPC Central Committee, General Secretary Xi emphasized that blockchain technology should play an important role in industrial transformation. We should strive to overcome a number of key core technologies and improve the independent innovation capability of blockchain technology, accelerate the innovation and development of blockchain technology and industry, and enable blockchain technology to contribute to building a strong cyber nation, developing the digital economy, and assisting economic and social development.

The report of the 20th National Congress of the Communist Party of China states: "We must focus on the real economy in driving economic development. We will focus on the real economy, advance new industrialization, and accelerate the building of a strong manufacturing country, a strong quality country, a strong aerospace country, a strong transportation country, a strong cyber nation and a digital China."

The era of digital economy is characterized by 5G, cloud computing, big data, the Internet of Things, artificial intelligence, and mobile internet, where new-generation information technologies such as blockchain are applied to all aspects and corners of our economy, society, and daily life. It is the process of comprehensive advancement of digital technology into all areas of human life. Internal audit, as a key tool for corporate governance, inevitably faces the opportunities and challenges brought by digital transformation.

By promoting digital transformation in auditing, enterprises continuously strengthen their audit functions, enriching audit perspectives and enhancing audit efficiency. The digital transformation of auditing has become an essential pathway for internal audit to adapt to the digital megatrend and support enterprises' high-quality development. "Blockchain + auditing" enables online real-time auditing, risk assessment, and early warning, representing an important measure for digital transformation.

The Ministry of Finance of China issued the notice on printing and distributing the "Accounting Informatization Development Plan (2021-2025)" in December 2021 (Caikuai [2021] No. 36), which states: "Improve the information technology supporting facilities for internal control systems and promote the internal control system effective implementation." [1]

Therefore, enterprises should promptly identify, assess, and address internal and external risks related to achieving control objectives, and reasonably determine risk response strategies. Based on the risk assessment results, implement corresponding control activities to keep risks within acceptable limits.

Numerous facts and lessons have repeatedly demonstrated that establishing a comprehensive risk management system and building sound and effective internal control mechanisms are essential conditions for the survival and healthy development of enterprises. Internal audit should undertake the evaluation of the organization's risk management, control, and governance processes to fulfill and enhance responsibilities, achieving the transformation from compliance-based, singular auditing to consultative, continuous auditing.

It is essential to fully apply advanced information technology tools, continuously expanding the scope of coverage, extending the temporal focus of internal auditing from post-event to in-process and pre-event stages, developing spatially from accounting to business, operations, and governance, while the information scope evolves from offline fragmented data to online integrated data augmentation.

"Audit digitization focuses on comprehensive, multi-perspective, and in-depth big data analysis, with enterprises striving to achieve through audit digitalization assistance in accurately responding to external regulations, deeply exploring internal risks, and promptly identifying development opportunities, empowering enterprises in the era of digital intelligence development to provide greater value (EY, 2022) [2]."

In recent years, the deep integration of industrial digitalization and digital industrialization has made production and operational activities across various industries increasingly reliant on digital technologies such as big data, artificial intelligence, blockchain, and cloud computing. Data has become the fifth major factor of production alongside land, capital, labor, and technology.

As corporate strategic decision-making, production operations, and management methods progressively achieve digitalization, internal auditing's objects, methods, and tools have also evolved accordingly. In the face of real-time, massive, and diverse data, it is essential to fully leverage the functions of internal auditing, quickly make audit responses, efficiently process various types of information, and conduct centralized multi-dimensional analysis.

Audit digitalization achieves this by integrating and operating enterprise data, establishing a scientific analysis platform, embedding it into the rectification closed-loop process, generating process optimization recommendations, and achieving comprehensive internal auditing digital lifecycle management, empowering organizations to fully leverage their internal audit functions.

As an important governance mechanism, internal audit plays a significant role in ensuring enterprises' compliant and stable operations as well as efficient and reliable functioning. In the face of rapidly changing market environments, fast-iterating scientific technologies, and continuously improving regulatory policies, internal departmental auditing must innovate audit methods, optimize audit strategies, and enhance audit effectiveness.

Audit digitalization can support data processing, data analysis and data application, along with the flexible combination of various methods including remote auditing, continuous auditing, and agile auditing, leveraging comprehensive implementation of multiple functions such as customized model development, benchmarking against industry best practices, and real-time monitoring and alerting to reduce audit implementation costs, enhancing audit execution efficiency, and facilitating the transformation of audit results, providing support for improving the effectiveness of internal audits in enterprises.

In the era of the digital economy, blockchain technology is widely applied across multiple fields such as finance, the Internet of Things, e-commerce, and smart manufacturing. The increasingly mature blockchain technology is bound to play a significant role in the audit field, leveraging its distributed decentralization, public ledger, and transparency unique advantages to enable comprehensive enterprise-wide auditing, automated tax filing, and real-time monitoring of business operations, thereby enhancing audit data quality and authenticity, facilitating the transformation and upgrading of audit models.

Blockchain technology enhances audit quality and efficiency, and expands the scope of auditing. It possesses unparalleled advantages in terms of monitoring breadth and depth, real-time auditing, and other aspects.

II. Characteristics and Technical Architecture of Blockchain Technology

(I) The Concept of Blockchain and Blockchain Technology

Blockchain refers to a collectively maintained technical solutions for distributed trusted databases. Any number of nodes participating in the system record the information exchanges within the system over a period of time. The data is processed and recorded into a data block through cryptographic algorithms, and a fingerprint of this data block is generated to link to the next one.

Each data block and its checksum are collectively verified by all participating nodes in the system to determine the authenticity of the record. "Blockchain is a type of non-relational technical solutions for blockchain databases are collectively referred to, and developers can implement blockchain technology through various programming languages and architectures (Li Wei, 2021) [3]."

Blockchain is a chain composed of consecutive blocks. Each block contains certain information, and they are arranged according to their respective self-generated time sequence connected into a chain. This chain is preserved in all servers, as long as there is at least one server in the entire system that can operate, and the entire blockchain is secure. These servers are referred to as nodes in the blockchain system, and they serve as the entire blockchain system providing storage space and computational power support.

To modify information in the blockchain, approval from more than half of the participating nodes must be obtained to reach consensus and modify the information across all nodes, and these nodes are typically controlled by different entities, thus making it difficult to tamper with blockchain information.

Modifying information in a blockchain is an extremely difficult task. Compared to traditional networks, "blockchain possesses two core characteristics: first, data are difficult to tamper with, and second, they are decentralized. Based on these two characteristics, the information recorded by the blockchain is more authentic and reliable, enabling helping to solve the problem of mutual distrust among people (Lin Yalong, 2021)[4]."

The block contains transaction information with specific transaction details, block root hash (Hash, generally translated as hash or digest; it transforms an input of arbitrary length into a fixed-length output through a hash algorithm) hash, timestamp (Unix timestamp, is a sequence of characters or encoded information used to identify when a specific event occurs, typically providing date and time, sometimes accurate to fractions of a second), along with other data.

According to the information, the timestamp contains the time information when the block is generated and linked to the main chain, while other data information mainly consists of block signature information, random values, among others. Overall, blockchain technology integrates cryptography, mathematics, computer science, network science, economics, and logic and other disciplines, forming a new technology through interdisciplinary integration.

(II) Characteristics of Blockchain Technology

Blockchain is the cornerstone for building trust and a credible network for transmitting credit and value. "Blockchain focuses on constructing secure and reliable blockchain infrastructure enables enterprises and governments to rapidly and efficiently establish blockchain networks and industry applications, achieving enabling the credible and rapid flow of capital, logistics, and information, as well as efficient and trustworthy collaboration, helps reduce cooperation costs and enhance efficiency (Hua Wei Yun, 2023)[5]."

A system possessing the following three properties is considered a blockchain: first, a blockchain is a system placed in a non-secure environment distributed database (system) in the environment; secondly, blockchain employs cryptographic methods to ensure that existing data cannot be tampered with; third, blockchain employs consensus algorithms to reach agreement on newly added data (Technical Shore, 2023)[6].

1. Distributed Decentralization

Distributed decentralization is the most prominent characteristic of blockchain, where each node on the blockchain can operate independently without relying on a central node for self-management. The blockchain data transmission mode adopts a "peer-to-peer" approach, where data is recorded regardless of which node it is entered from.

The transaction information is transmitted to the blockchain cloud, and other nodes will automatically record the transaction data, thereby achieving distributed recording, storage, and update. Since blockchain systems store data and information in the cloud, any node on the blockchain system can become the master machines become phased centers, where each block is a data unit, a record, with multiple parties participating in bookkeeping and information writing and maintenance.

The advantages of distributed decentralized systems are mainly reflected in improving efficiency and avoiding system failures caused by central node breakdowns, decentralization, transparency and immutability of information, reduction of transaction costs, conservation of human resources and risk control, and ensuring universal ledger keeping and the implementation of public ledgers, among other aspects.

2. Data authenticity, openness, and transparency

Blockchain technology, through technological innovation, relies on the common algorithms of blockchain and the trust network established between machines, thereby breaking free from third-party certification, credit endorsement, and guarantees, forming a completely new credit mechanism, fundamentally transforming the centralized credit system.

Before being recorded into the blockchain, data undergoes verification according to publicly standardized algorithmic criteria, enabling the timely detection of abnormal data and achieving real-time transaction verification; after data entry, all relevant nodes on the blockchain collectively determine whether the record is accurate, thus the potential for falsification is greatly reduced, it can effectively prevent fraud, and real-time data audit trails can be achieved.

Since all data on the blockchain is tagged with timestamps, data cannot be arbitrarily tampered with and possesses irreversibility, thereby ensuring the authenticity and validity of the data. Since the data information on the blockchain system can be audited, traced, and the original transaction records can be restored by all relevant nodes, it ensures data openness and transparency.

3. Data Immutability

Blockchain systems utilize cryptographic techniques to encrypt identity verification information, ensuring secure online transactions between parties and preventing data from being tampered with during transmission. Since the blockchain system adopts a distributed decentralized database approach, each node on the blockchain can obtain a complete set of data information, and once the verified information is added to the blockchain, it will be permanently stored unless more than half of the nodes can be simultaneously manipulated.

Modifications to the database on a single node are invalid, and data cannot be arbitrarily modified, the data reliability is extremely high, and data security is ensured.

4. Anonymous Open Autonomy

Based on the trustless mechanism, every participating node on the blockchain is anonymous, and there is no need for public disclosure of identity information between nodes. Nodes do not need to trust each other. Transaction parties communicate through specific network addresses, and only those possessing the private key can unlock the corresponding "wallet".

The blockchain system is open to the public, and anyone can query and use all public blockchain nodes except private information, all relevant data is highly transparent and open across the entire system. All nodes in the blockchain system adopt the same protocol in accordance with the specifications and requirements, based on a mutually trusted environment, any node can freely and efficiently record, update, and store data, with each node successfully achieving self-querying, browsing, and maintenance of its own database.

(III) Technical Architecture of Blockchain

The blockchain technology architecture primarily consists of the physical layer, data layer, network layer, consensus layer, and application layer.

1. Physical Layer

The focus of the physical layer is on network resources, storage resources, and computing resources. Blockchain nodes are typically composed of servers, edge nodes, and IoT devices, among others, while the scheduling, networking, and allocation of storage resources is an essential element of blockchain infrastructure.

Cloud computing technology can be perfectly integrated with blockchain infrastructure, bringing advantages in multiple aspects such as usability, trust, security, scalability, and data management. The underlying infrastructure of cloud computing can provide the blockchain physical layer with network resources, storage resources, and computing power resources.

The combination of these two can be used to ensure the security architecture of enterprises. Blockchain as a Service (BaaS) implemented on cloud computing platforms is an indispensable blockchain infrastructure. "Major cloud service providers such as IBM and Microsoft Azure have already developed and deployed BaaS platforms, offering developing, utilizing, and hosting blockchain applications, functionalities, and smart contracts using cloud computing-based services (Li Zhengmao et al., 2022) [7] (p. 280)."

2. Data Layer

The technical key at the data layer lies in the account model and blockchain data structure. Currently, blockchain widely adopts the UTXO (Unspent Transaction Output) model and Account model.

UTXO is recorded based on the inputs and outputs spent in transaction records, with the advantages of being stateless and having good concurrency performance. It can reduce the consumption of computational resources, but the disadvantage is poor utilization of the state space. The Account model is similar to real life, where each address belongs to the same account.

Each transaction updates information such as account balances and statuses, with the advantage of high programmability, making it suitable for providing complex functionalities like smart contracts services. Therefore, the Account model is more suitable for the account model technology of infrastructure.

The main data structures stored in the blockchain include two mature solutions: the blockchain structure and the directed acyclic graph (DAG). The blockchain data structure is a widely adopted data structure scheme, where blocks are interconnected to form a "blockchain," with each block containing transactions data, random numbers, timestamps, etc.

The advantage of the DAG data structure is that transactions can be executed concurrently, eliminating transaction throughput bottlenecks. The neck can be horizontally scaled by increasing the number of nodes, with fast transaction confirmation speed, but it has not been widely adopted and is currently using this technology. The main blockchains are Hedera Hashgraph and Fantom.

3. Network Layer

The network layer primarily focuses on distributed network mechanisms including P2P (peer to peer, user group to user group) networking, data propagation, and message verification. The network layer is also referred to as P2P the layer, the propagation layer, is responsible for inter-node communication and the propagation of world states.

The network layer ensures that nodes can discover each other and communicate with one another through communication, propagation, and synchronization to maintain the effective current state of the blockchain network. A P2P network is a computer network in which computers (nodes) are distributed and share the network workload to achieve the ultimate goal.

"Executing transactions on the blockchain nodes are divided into two types—full nodes and light nodes. Full nodes ensure transaction validation and confirmation, mining, as well as consensus rule enforcement. Full nodes are responsible for maintaining trust within the network. Light nodes only retain the headers of the blockchain and can send transactions (Li Zhengmao Deng, 2022) 7."

"Blockchain utilizes a distributed network where everyone can download all information on the blockchain and interacting with it. The blockchain platform primarily utilizes decentralized networks and distributed networks, where nodes in the distributed network the geographical distribution of nodes completely avoids the drawbacks of centralized networks, ensuring the robustness and stability of the network, forming a distributed network.

The main idea of the network is that every node can be accessed, and each node can obtain equal access rights, making it more suitable as a base the underlying network technology for infrastructure construction.

4. Consensus Layer

The core of the consensus layer is the consensus mechanism. The consensus mechanism is the core of blockchain, and the consensus layer is the most critical and important layer in any blockchain. Consensus is responsible for verification proving blocks, ordering blocks, and ensuring consensus among all nodes.

"Currently mature technologies include PoW (Proof of Work), PoS (Proof of Stake), DPoS (Delegated Proof of Stake), stake, delegated proof of stake), PBFT (practical Byzantine fault tolerance, practical Byzantine fault tolerance algorithm), and RAFT (replicated and fault tolerant) and others (Li Zhengmao et al., 2022) 7."

PoW as the most classic consensus algorithm, it enables nodes to reach agreement by computing block hashes, with the advantages of being simple and efficient, allowing anyone can participate, but the disadvantage is the waste of computational resources, making it unsuitable as a technical choice for infrastructure.

PoS Proof of Stake consensus by mortgaging token technology in the blockchain to obtain block writing rights, the advantages are low energy consumption and fast consensus speed, while the disadvantages are blockchain requires a token system.

DPoS (Delegated Proof of Stake) is a consensus algorithm based on stakeholder voting, which differs from PoS. It can significantly reduce the number of nodes participating in consensus, achieving rapid consensus verification, but the drawback is that it still relies on the tokens of the blockchain network incentive.

The PBFT consensus protocol is a Byzantine fault-tolerant replication algorithm suitable for private chains and consortium chains that require strong consistency. In the context of consortium chains, RAFT is a voting-based consensus scheme designed to make the Paxos algorithm easier to implement in practical scenarios.

RAFT achieves low latency and high throughput; however, the overall performance of this consensus scheme depends on the leader node its operational state exhibits low fault tolerance. Hybrid consensus, by combining the advantages of the aforementioned consensus mechanisms, forms a hierarchical consensus mechanism, balancing decentralization and efficiency can meet the performance requirements necessary for building blockchain infrastructure.

5. Application Layer

The application layer leverages the blockchain to provide smart contract capabilities. The focus of the contract layer is to utilize smart contracts, algorithms, and various scripts to implement complex programmable transactions in the blockchain. The group is referred to as the state response rules of smart contracts, which are used to express business logic, control digital assets, and determine the rights of participants and obligations.

If two or more participants agree to all terms in the smart contract, the contract will be cryptographically signed and broadcast to the entire network. Once the conditions are met, the smart contract will automatically and independently execute according to predefined rules. Similar to blocks, transactions in the chain, smart contracts are self-executing programs whose inputs, outputs, and states are verified by every node in the network.

To implement transaction logic, each blockchain system uses its own programming language. The application layer is what clients or end-users interact with at the presentation layer, client applications initiate transactions to start business workflows. This layer constitutes the distribution of products and services the centralized user interface of ledger technology encompasses various business applications such as digital identity, market security, intellectual property, and the Internet of Things.

Applications can utilize a specific language's Software Development Kit (SDK) or blockchain implementation to provide command-line interface tools communicating with network nodes. These applications help optimize business management and provide new services. The application layer includes frameworks and applications user interfaces, APIs, and scripts that end users can utilize to interact with the blockchain network. It has a component called the execution layer the sub-layer, the execution layer, contains actual executable code and rules.

III. The multilateral trust characteristic of blockchain contributes to credit risk management.

Blockchain is a distributed ledger technology that, in essence, functions as a shared database stored across the data or information within it possesses characteristics such as being unforgeable, fully traceable, auditable throughout the entire process, publicly transparent, collectively maintained, and shared among multiple parties features.

Based on these features, blockchain technology establishes a solid foundation of trust and creates reliable cooperation mechanisms. It creates a new paradigm is a protocol concerning trust, upon which an internet for transferring value—the value internet—may be constructed.

At the most fundamental level, ledgers depict economic and social relationships. Consensus on the ledger and precise trust are the foundations of the market economy one of the cornerstones. The encrypted global distributed independent ledger network provides governance, central banks, or any monopolistic central institution management another mode of operation beyond reason has shaken the traditional trust mechanism at the core of finance, creating a technology-based society trust system.

For existing financial ecosystems designed based on centralized institutions, the emergence of blockchain has brought about tremendous disruption. Blockchain transforms the social system from bilateral mutual trust or the establishment of central trust mechanisms into multilateral mutual trust and social co-trust, where people can transcend time and authority to achieve credit co-construction.

To regulate blockchain technology services, on January 10, 2019, the Cyberspace Administration of China issued the "Blockchain Regulations on the Management of Information Services"; May 23, 2023, "Blockchain and Distributed Ledger Technology - Reference Architecture" (GB/T the national standard (GB/T 42752-2023) [8] has been officially released and will be implemented on December 1, 2023, marking China's first approved and released blockchain national standards in the field of blockchain technology.

Beyond its application in digital currencies, blockchain technology is also utilized in numerous other scenarios.

(I) Blockchain Technology Holds Great Potential in Corporate Finance and Audit Systems

Financial fraud incidents among listed companies occur from time to time. According to notifications from the China Securities Regulatory Commission, in 2020 the Commission investigated and penalized listed companies a total of 59 cases involving financial fraud and other illegal activities by listed companies, accounting for 23% of all information disclosure cases.

Financial fraud incidents among listed companies exhibit the following characteristics: firstly, the occurrence of financial fraud cases exhibits a full-chain pattern, characterized by complexity and systematicity, fabricating the entire chain the primary manifestation is the systematic financial fraud carried out by the business.

Secondly, fraudulent methods are constantly emerging and intermingling with each other. It possesses a certain degree of concealment. In addition to employing "traditional methods" such as using counterfeit bank and logistics documents, fabricating contracts, and falsifying invoices, it also financial fraud is perpetrated through covert new methods such as overseas operations or novel financial instruments.

Furthermore, the motivations behind financial fraud are diverse fraud. Common motivations for fraud include performance commitment pressure, market value management, and concealing embezzlement of funds. This indicates that listed companies' financial there are still many difficult-to-resolve pain points in the accounting processing within the system (Hu Cuihua et al., 2022)9.

1. Real-time on-chain auditing facilitates timely risk identification and the implementation of corresponding control measures.

Developing financial systems based on blockchain technology requires substantial human, material, and financial resources, taking into account technical capabilities and investment due to factors such as the input-output ratio, most listed companies find it difficult to invest substantial effort in updating financial systems based on blockchain infrastructure, and listed if companies develop their systems independently, the standardization of their financial systems becomes difficult to achieve.

In contrast, blockchain infrastructure technology companies possess core technologies and in terms of technical talent and R&D expenses, both are superior to the financial systems independently developed by listed companies. If blockchain technology companies can provide the municipal corporate financial system, providing financial platforms similar to those offered by Chinese companies like Yonyou and Kingdee, will possess the following advantages:

First, making the financial business processes of listed companies more efficient, the distributed workflow developed through smart contract technology will achieve financial the digitization of financial processes enhances the efficiency of financial system collaboration; secondly, it reduces financial costs by leveraging the distributed nature of blockchain technology.

First, the characteristics of distributed ledgers will significantly shorten the financial approval process cycle; third, the features of blockchain technology—transparency, sharing, and immutability— ensuring the authenticity of listed companies' financial information will promote a virtuous cycle in the disclosure of financial information by listed companies and enhance its standardization;

Fourth, it facilitates business supervision and enterprise risk management, enabling regulatory and auditing institutions to conduct real-time monitoring of listed companies on-chain auditing helps enterprises promptly identify risks and implement corresponding control measures.

2. Blockchain contract functionality ensures that contract information is easily traceable and tamper-proof.

Ant Technology Group's blockchain smart contract platform includes modules such as identity management, compliance management, and regulatory oversight. The share management module primarily verifies the authenticity of transactions through enterprise business registration information and IP addresses.

Compliance management is responsible for managing the information of suppliers and sales parties, combined with the electronic signatures and contract summaries in the financial system, confirms the contract signing whether the contract is compliant. The regulatory module can set permissions for signing personnel, monitor and audit the occurrence of contract transactions.

Ant Technology Group blockchain platforms ensure third-party evidence storage for contracts while also guaranteeing their storage security. By relying on asymmetric encryption, digital signature technology can not only ensure the integrity and compliance of contracts, but also verify their origin, making them tamper-proof and non-repudiable non-repudiation.

The drafting, signing, sending, electronic signing, storage, querying, and modification of blockchain contracts are all conducted within Ant Technology it is conducted on the consortium blockchain platform. Once the contract is successfully signed, a request is sent to the proxy nodes. Once the majority of proxy nodes confirm consensus, the blockchain will update with a block containing contract information to ensure that the contract data is easily traceable and immutable tampering.

Ant Technology Group's blockchain platform features blockchain-based electronic bills/electronic invoices. For financial companies and construction companies, during the audit process of various listed companies such as Sinopec, it was found that both internal and external audits often only have access to invoices or bank statements the authenticity of a single copy is difficult to guarantee.

When large companies handle travel expense reimbursements, they often mention that the process is slow and the workflow is cumbersome the process is cumbersome and the amounts are inaccurate, making it difficult for both internal and external auditors to review tens of thousands of documents from listed companies within a short period of time issues in invoices and documents.

Effectively addressing document circulation problems during internal and external audits helps enterprises prevent fan financial fraud. Meanwhile, in annual audits, the high costs of confirmation inquiries and mailing, coupled with untimely responses, also pose challenges for external auditors and corporate financial personnel find it quite challenging.

The bill circulation process involves numerous participants, resulting in inefficient circulation and low credibility information opacity; the regulatory costs for verifying the actual conditions of underlying invoices and bills increase, while audit efficiency remains low, making material falsification highly prone to occur and other phenomena (Hu Cuihua et al., 2022) [9] (pp. 76-77).

(II) Application of Blockchain in Asset Securitization: Utilizing Modern Digital Technologies to Mitigate Credit Risks

1. JD.com Launches the First Standardized Blockchain ABS Solution

In recent years, based on the continuous integration and innovation of blockchain technology and financial scenarios, JD Digital Technology has focused on trustworthy enterprise-grade blockchain services, focusing on supply chain management and digital finance, drive industrial innovation and integration, establishing independently innovative blockchain open-source underlying technology engine.

In the past, due to considerations of information security and transparency, plan administrators, lawyers, and the business communication process involves multiple parties such as law firms, rating agencies, accounting firms, and custodian banks, resulting in lengthy data verification times and inefficient mutual communication high trust costs have led to a relatively slow advancement of asset securitization.

However, the multi-party collaborative networking system constructed through blockchain's distributed architecture on one hand, it enables authorized visibility of multi-party information, improving the efficiency of information acquisition during business execution and achieving transparent supervision of underlying assets; on the other hand, leveraging smart contracts (Smart a contract is a computer protocol that facilitates and verifies digitally or the negotiation or performance of contracts; smart contracts enable trusted transactions to be conducted without a third party, which is a feature of blockchain one of the core technologies) and other technologies, transforming originally offline-executed business processes into on-chain operations, enhancing multi-party business collaboration efficiency, and reducing low execution cost.

According to the authorized information jointly released by JD Digital Technology and multiple institutions, efficiency has been improved, underlying assets have been penetrated, and intelligent asset monitoring has been achieved product quality and automated auxiliary reconciliation.

In June 2019, JD Digits launched the market's first blockchain ABS standardized solution, becoming as one of the most representative technological output directions in the financial field, through JD Digits' self-developed JD.BaaS (Blockchain as a Service, platform, assisting asset owners, plan managers, law firms, rating agencies, accounting firms, custodian banks, and other ABS (Asset-Backed Securities, ABS) business participants optimize business processes and enhance ABS issuance business efficiency.

After the blockchain networking solution is completed, a new ABS business node can be connected within 2 days. Compared with the original compared with the technical solution, it can reduce deployment time by 85%, saving over one million yuan in operational costs annually per business node, while it has also effectively enhanced the transparency and accountability among business participating institutions, thereby better safeguarding the security of financial-related data (Global Times, 2020) [10].

From being a builder of the "trusted supply chain" to a practitioner of "digital financial innovation," JD Technology has always regarded blockchain as the core technology for enterprise development, deeply participating in the technological transformation wave of China's financial industry.

Since the formal establishment of blockchain technology in 2016 from the technical team, to the launch of the "Zhizhenlian Anti-Counterfeiting Traceability Platform" the following year, and then to JD.Chain (a blockchain specifically designed for enterprise applications) framework systems), the release of JD.BaaS, and the launch of ABS standardized technical solutions, JD Digits has already established a presence in diverse scenarios through practical application, a comprehensive blockchain technology and service architecture has been refined.

2. Baidu Finance Collaborates with Other Institutions to Issue Blockchain-Supported ABS

In June 2016, Baidu invested in a U.S. company named Circle (Chinese name: Shike; founded in 2013, which is a U.S. fintech startup, primarily providing payment and transfer services based on blockchain as the core underlying technology; founded in 2016 Worldpay China (Circle China), a blockchain technology payment company; in May 2017, Baidu Finance collaborated with other financial institutions blockchain technology-supported ABS projects have been issued.

Don Tapscott, the father of the digital economy, once said: "Blockchain technology will play a crucial role in future society it will have a broad and profound impact, becoming the most influential black technology in the coming decades (Fang Lifei, Liu Guiying, 2020)11." Don Tapscott succinctly articulated the tremendous driving force of blockchain technology across all aspects of social production and daily life.

The blockchain wave has swept across various fields globally, forming an unstoppable momentum worldwide.

IV. Industrial Blockchain Reduces Financial Compliance and Legal Compliance Risks, Facilitating Financing

(I) Blockchain applied to supply chain finance enables efficient risk management and convenient financing.

After all nodes in the industrial supply chain are on-chain, the private key signature technology of blockchain ensures the data integrity of core enterprises and other participants reliability; while contracts, bills, and other documents being put on the chain represent the digitization of assets, facilitating circulation and enabling value transfer.

Blockchain ensures accuracy having identified the pain points for small and micro enterprises and financial institutions within the supply chain system. In most supply chains, the core enterprises (or as the chain leader enterprises possess strong bargaining power, they typically do not engage in cash transactions with suppliers but instead adopt methods involving the transaction method involving payment terms, which entails issuing payment instruments to upstream small and medium-sized enterprises and settling accounts upon maturity.

In this process, trust cannot be established transmission. The actual participants are only the "close relatives" enterprises upstream and downstream of the core enterprise, namely the first-tier suppliers and distributors, while their second-tier, the accounts receivable periods that third-tier and even multi-tier suppliers—the "distant relatives" suppliers and distributors—can receive are becoming increasingly shorter.

Coupled with the core enterprises, credit instruments cannot be split or circulated, and the credit transmission mechanism in the supply chain is not smooth, with most "distant partners" frequently facing funding shortages facing the pressure of capital shortages, they need to turn to financial institutions for financing.

However, small and micro enterprises often fail to obtain it due to their own limitations. After receiving an order, suppliers typically need to increase corresponding working capital to organize production. However, banks restrict "multiple pledges on a single asset" the avoidance leads to multi-tier suppliers being unable to use orders as collateral for loan repayment.

Can existing assets be used as substitute collateral? What about it? Small and micro enterprises have low utilization rates of mortgaged assets, and due to their small scale, immature governance structures, and low financial transparency, it is difficult to obtain effective collateral resources from other channels, and credit enhancement is once again hindered.

Furthermore, "distant relatives" lack direct connections with core enterprises the limited trade interactions have resulted in insufficient trust data, while the lack of practical platform-based and systematic management tools makes it difficult to activate cooperation between upstream and downstream players in the industrial chain.

Before granting loans, traditional financial institutions must undergo pre-lending due diligence, in-depth information verification by the mid-lending approval department, and credit the information is incorporated into three processes, with limited reference basis. The collection of information and risk perception decisions are all conducted by multiple business personnel it has a high dependence on human resources, carries significant moral hazards, and is difficult to scale.

When these three processes are combined, traditional financial institutions in risk control, it takes approximately three weeks, and settlement cannot be automated, resulting in persistently high customer acquisition and credit enhancement costs.

In traditional credit, on the basis of the model, all nodes of supply chain finance constitute a blockchain platform, spanning interest boundaries to cover the upstream and downstream of the supply chain logistics enterprises, including logistics, warehousing, quality inspection, as well as financial companies and financial institutions, have enriched the collaboration among various participants, option space.

The upper-level business system utilizes the underlying blockchain platform to access comprehensive trade information of small and micro enterprises, including asset ownership, registration and storage on the blockchain for rights, quantity, quality, warehouse receipts, guarantees, as well as accounts receivable, inventory, prepaid accounts, etc., furthermore, standardizing, digitizing, and tokenizing the assets of small and micro enterprises, thereby generating bond certificates for enterprise payments, financing, and circulation.

The issuance, circulation, splitting, and redemption of accounts receivable and other assets from suppliers to core enterprises can be completely and truthfully recorded and traceability, which significantly expands the scope of information references for financial institutions. Consequently, the challenges of reliable transmission of trust and value can can be resolved at an extremely low cost (Tang Daosheng et al., 2020)12.

Tencent established the Financial Blockchain Cooperation Alliance in May 2016. In April 2017, Tencent released the "Blockchain Solution White Paper" the "Chain Solution White Paper" aims to build a blockchain ecosystem; in December of the same year, it jointly released with Guangdong Youbei Company and Huaxia Bank a supply chain financial service voucher "Xingbei Cloud Chain" based on blockchain technology.

Leveraging the inherent immutability and distributed nature of consortium chains, through a cross-validation mechanism, the credibility of business data from each node is ensured, addressing the long-standing issues in warehouse receipt pledge financing and lending the issue of identity trust significantly enhances the operability of credit assessment for financial institutions and substantially reduces the difficulty of their risk control.

Notably, on-chain electronic vouchers are divisible, which enhances asset liquidity and significantly improves financing accessibility high, effectively alleviating the financing difficulties and capital shortages faced by multi-tier suppliers.

Banks adopt corresponding measures based on on-chain assets and trade information taking action not only helps reduce the service costs of lending but also enables the acquisition of low-risk, high-yield assets. In the participation of insurance companies, moreover, financial institutions are protected by insurance payouts even when encountering abnormal risks.

Core enterprises are also major beneficiaries, the reduction in overall supply chain costs has enabled the optimization of its payment term arrangements, thereby strengthening long-term strategic partnerships with suppliers this transformation ensures its industry-leading position.

(II) Industrial Blockchain, Reducing Financial Costs and Contract Performance Risks

In TCL Group's industrial blockchain project, TCL Group will incorporate suppliers of comparable scale and their shared customers into a in the fund clearing chain, the use of blockchain combined with upstream and downstream industry procurement and sales enables on-chain contract relationship confirmation and clearing and settlement, significantly reducing duplicate payments, fund occupation, and related financial costs.

The contractual legal relationships underlying on-chain clearing and settlement involve the creation, performance, and creditor-debt the legal guarantee for the transfer of service legal relationships rebuilds contractual trust between parties based on the openness, transparency, and traceability of the blockchain.

The initial application scenarios of the chain involved relatively simple legal relationships. According to the definition of supply chain by the supply chain finance community, currently China is still in the era of Supply Chain Finance 3.0, characterized by the "logistics financialization" jointly promoted by e-commerce groups and financial institutions, with its core being enterprises engage in maximum data sharing with banks and other financial institutions, shifting financial service targets from retail finance to wholesale finance.

The application of blockchain technology is expected to bring supply chain finance into the 4.0 era, characterized by financial services achieving high in highly networked and organized communities, fully peer-to-peer precision arrangements are achieved through the complete integration of logistics, capital flows, and data streams a vision that enables a supply chain finance ecosystem, with blockchain technology serving as the underlying technical foundation for Supply Chain Finance 4.0.

In March 2017, Dianrong (an internet lending information service intermediary company) partnered with Fubon (a supply chain finance subsidiary of Foxconn Technology Group) the financing service platform provides one-stop funding solutions for enterprises through various financing methods such as commercial factoring, financial leasing, and micro-loans seeking a solution.) Announced the joint launch of a supply chain finance platform named "Chained Finance" (Qianfu Commercial Factoring) blockchain financial platform, which interfaces with industries such as electronic equipment suppliers, automotive manufacturers, and service manufacturers in the manufacturing sector.

Particularly targeting small and medium-sized enterprises in these industries, we leverage the characteristics of blockchain technology to make supply chain finance more efficient and enables online batch loan disbursement, with on-chain contracts, financing, and debt transfer legal relationships being intensive and structured.

Consequently, risks related to financial compliance and legal compliance, as well as financing costs, have been significantly reduced (Wang Youqiang, Tu Jing, 2020)13.

(3) Applications of Blockchain in Logistics, Finance, Insurance, and Copyright Protection

1. Application of Blockchain in Logistics, Intelligent Securities Platforms, and Mutual Insurance Fields

In July 2016, Ant Financial, a subsidiary of Alibaba Group, had already applied blockchain technology to Alipay's charity donation platform platform, which was later extended to the field of mutual insurance applications: In October 2016, Alibaba, Microsoft, and Fadada (Fada Dada is a leading domestic electronic signature and electronic contract cloud platform, dedicated to providing enterprises, governments, and individuals with legally compliant digital signature solutions and electronic document signing and management services) jointly developed the "Legal Chain," proposing an Alibaba-based through the email archiving products of cloud platforms, which back up emails and cloud services on the legal chain, Chinese judicial institutions can achieve large-scale adoption digital evidence.

In March 2017, Alibaba invested in a company called Symbiont (a blockchain-based intelligent securities issuance and trading platform platform, focusing on the private equity market and corporate bond market) securities companies, jointly build a blockchain technology-based issuance and Trading Intelligent Securities Platform.

In November 2017, Tmall Global announced an upgrade to its Global Origin Traceability Program, which would covering 63 countries and regions worldwide, involving 3,700 product categories and 14,500 overseas brands, this initiative will comprehensively empower the entire industry.

In February 2018, Cainiao and Tmall Global initiated the use of blockchain technology to track, upload, and verify the logistics of cross-border imported goods the end-to-end information, covering processes such as production, transportation, customs clearance, and inspection declaration, assigns a unique "identity" to each imported commodity and provide it for consumers to query and verify.

In June 2018, Alibaba launched the first cross-border remittance service based on blockchain electronic wallets services (Fang Lifei, Liu Guiying, 2020)11.

2. Application of Blockchain in Cross-Border Payments

Blockchain has enormous potential applications in financial fields such as international remittances, letters of credit,股权登记, and stock exchanges the value of applying blockchain technology in the financial industry lies in its ability to eliminate third-party intermediaries and achieve direct peer-to-peer connections, thereby completing transaction payments quickly while significantly reducing costs.

The introduction of blockchain technology addresses the information asymmetry in cross-border payments the issue of trust has been addressed, and a certain level of trust mechanism has been established.

Ripple (is the world's first open payment network that operates through this payment network can transfer any currency, including US dollars, euros, renminbi, Japanese yen, or Bitcoin, with transaction confirmation it can be completed within seconds, with no cross-regional or cross-border payment fees), Circle (encrypted payment company), China Silver Yes, Bank of Communications, China Merchants Bank, and others have already entered the market.

For example, Visa (a credit card brand operated by Visa International, headquartered in San Francisco, California, USA) the organization responsible for operation and management) launched Visa B2B Connect based on blockchain technology, which can provide institutions with a more cost-effective a lower-cost, faster, and more secure cross-border payment method to handle global business-to-business transactions.

It is important to know that traditional cross-border payment requires a waiting period of 3-5 days, along with a transaction fee of 1-3%. Visa has also partnered with Coinbase (the largest cryptocurrency exchange in the United States) (Exchange) launched the first Bitcoin debit card, while Citibank tested the operation of the cryptocurrency "Citicoin" on the blockchain.

In August 2022, the nation's first digital RMB penetration payment business was successfully launched in Xiong'an New Area of Hebei Province, achieving digital RMB new breakthroughs in application scenarios of blockchain payments in new districts.

3. Application of Blockchain in Copyright Protection

After the application of blockchain technology to notarization and certification, both registration and inquiry become extremely convenient, eliminating the need to travel between various departments. In August 2016, a consortium comprising Onchain (a leading Chinese blockchain technology company), Microsoft (China), Fadada and other institutions established the electronic evidence blockchain alliance "Falchain" in Beijing.

In December 2017, WeBank, Guang Zhouzhou Arbitration Commission and Hangzhou Yibi Technology Co., Ltd. jointly launched the Arbitration Alliance Chain for evidence preservation in judicial scenarios. In March 2018, the first "Arbitration Chain" judgment document was issued in Guangzhou, China (Li Liwei, 2021)[3].

4. Guangzhou Launches On-Chain Enterprise Service Platform, Leveraging Blockchain to Facilitate Business Environment Reform

Guangzhou On-chain Enterprise Service Platform, based on enterprise chain code technology and centered on enterprises, launches the "One Enterprise, One Code" the "one household" enterprise chain service and enterprise chain space, using "blockchain + QR code" to provide enterprises with trusted identity credentials, enterprise basic information and credit information are integrated with blockchain accounts to form enterprise chain codes, enabling digital trusted identity mutual recognition mutual recognition of signatures, combined with precise service functions of "enterprise credit and enterprise profiling," enables the integration of enterprise on-chain space and on-chain services integrated full lifecycle services.

Currently, Guangzhou has enabled blockchain spaces with enterprise chain codes for over 3,700 enterprises, activating the "Enter with the distinctive features of "enterprise credit and enterprise profiling," it provides blockchain services that enable "one-stop online processing and seamless chain operations," thereby reducing the administrative burden for enterprises rationalize the time and space costs of government services, achieving the circulation and sharing of enterprise-level government service data.

Furthermore, Guangzhou innovatively promotes advancing "blockchain + public resource transactions", a blockchain platform for public resource transactions has been established, achieving cross-regional "palm-based" public resource transactions "Handle matters online, handle matters anytime," reducing corporate cash burden by over 800 million yuan (Li Huiying, Guangzhou Cyberspace Affairs Office, 2024) [14].

Guangzhou is actively leveraging blockchain to facilitate business environment reforms. The Guangzhou Blockchain International Trade Platform has achieved a transaction volume of 78 billion yuan commercial and trade operations are put on-chain.

Guangzhou Development Zone has taken the lead in building a nationally leading "Tax Chain" blockchain invoice platform and a "Policy Credibility Chain" government applications. Hangxin Chain promotes the implementation of blockchain technology in the civil aviation business sector, achieving record storage and data traceability in the civil aviation field and other business functions.

The Guangzhou Internet Court launched the "Wangtong Falian" blockchain platform, which adopts a consortium chain model to connect various entities in Guangzhou City intermediate People's Courts and nine other institutions, along with data from over 30 internet platforms including "BAT," have established a digital governance ecosystem (Xu Wenwen, 2024) [15].

V. Blockchain Enhances Financial Data Stability and Reliability, Improving Audit Efficiency and Quality

Under the traditional audit model, audit work faces challenges such as distorted corporate accounting information, time lags, and limited audit coverage it faces numerous challenges, including vulnerability to tampering, low security, inefficient auditing, and service levels that fail to meet the requirements of economic and social development.

Blockchain technology will address these issues, establishing a comprehensive professional audit service system based on blockchain technology to bring the following changes have been made.

Auditing based on blockchain technology holds significant importance: first, the supervision of commercial activities and internal controls will be enhanced to some extent enhancing corporate value; second, data oriented towards risk management, enabling commercial trade to be supervised by audited blockchain technology, and the network the data contained within can be captured and audited at any time.

Since the establishment of the block, all data has been in an open-source state, and the data within the content cannot be altered or deleted, and all data can be traced and sourced. Therefore, audit or risk management professionals must by tracking and verifying the data of both parties in real time, blockchain technology can provide an immutable chain for both commodity goods and data information records.

Due to the emergence of consensus algorithms, blockchain networks no longer require third-party institutions to participate, and the data chain continues to shrink short, and transactions are visible to everyone, which can reduce the difficulty of auditing and continuously improve the efficiency of audit work.

Blockchain auditing technology enables round-the-clock tracking and monitoring of commercial transactions, allowing for real-time statistical analysis and generation of data recording facilitates the subsequent audit work, significantly improving audit efficiency and making audit results more persuasive.

Relying on blockchain the new audit model of technology utilizes modern computer technology to replace traditional manual processes, significantly reducing the costs incurred in auditing. Blockchain audit technology possesses the advantages of transparency and immutability, which can facilitate the establishment of a new mechanism for internal audit and promote the internal the internal control function has been strengthened, providing enterprises with reliable foundations and tools for risk identification and prevention.

(I) Distributed Decentralized Financial System: Enhancing the Quality and Authenticity of Audit Data

Enterprises establish a distributed and decentralized financial system based on blockchain technology, where all data requires verification by other employees and the transaction parties verify the information, and only after verification and authentication are the relevant economic data entered into the system. False information will be rejected from entry into the system, thereby ensuring the authenticity, validity, accuracy, and high quality of financial data.

The enterprise financial system is merely a part of the entire blockchain a node, while the remaining nodes automatically record and store relevant data, with this financial data being monitored and verified in real-time by the entire blockchain network to ensure data integrity against tampering.

For instance, when a company engages in trade with another domestic company, it generates logistics, communications, and employee therefore, nodes in the company's blockchain system will receive invoices from logistics companies, hotels, and telecommunications companies for travel-related expenses.

Due to the timestamping functionality of blockchain systems, economic activity records possess irreversibility, thereby ensuring the recording of the entire truth the comprehensive picture of economic activities has significantly reduced the space for financial fraud.

(II) Authenticity, Openness, and Transparency of Financial Data: Promoting the Transformation of Audit Models

Due to limitations in technical capabilities and auditing concepts, traditional audit work primarily focuses on post-event auditing and supervision. Big data and cloud computing as computing and blockchain technologies become increasingly mature, the audit philosophy centered on post-event auditing has fallen behind and can no longer meet the demands of socioeconomic development.

Therefore, traditional audit models and concepts must shift towards a whole-process audit approach encompassing pre-event, in-process, and post-event stages. Through encryption algorithms and data hashing, by comprehensively applying cryptography, mathematical techniques, and computer technology, it successfully achieves the elimination of third-party credit endorsement and guarantees, thereby ensuring the authenticity, openness, and transparency of data will enhance the information content of audit reports, increase the transparency of audit work, and improve audit quality.

Under the impetus of blockchain technology, the audit model will undergo the following transformations: from sampling audits, periodic audits, and computer-assisted audits from individual, single-object auditing modes to holistic auditing, whole-process auditing, blockchain automated auditing, and various nodes within blockchain systems automated auditing mode.

(3) Immutability of Financial Data: Reducing Resistance to Audit Oversight

Under the existing financial and accounting system, enterprise auditors are constrained by their positions and authority, while enterprise leaders consider various factors, it will inevitably interfere with audit records and audit supervision, adversely affecting audit work, reducing audit quality, and hindering audit operations the enhancement of transparency makes it difficult to ensure the independence of audit work.

In contrast, financial systems based on blockchain technology possess timestamp functionality and distributed ledger characteristics ensure that data cannot be arbitrarily altered. Even if enterprise auditors attempt to tamper with data under coercion from corporate executives, any alteration of accounting data, concealment, or fabrication of false transaction records will be rendered unachievable.

The immutability of blockchain technology will enhance the enhancement of financial data stability and reliability improves the independence of auditors.

(IV) Blockchain Anonymity and Open Autonomy: Enhancing Audit Efficiency and Audit Report Quality

Blockchain technology possesses the characteristics of openness and autonomy, enabling it to ensure that information entered into the ledger undergoes rigorous verification and multi-layered monitoring immutable, ensuring data authenticity and integrity.

The blockchain system conducts real-time auditing and automated verification based on pre-established audit criteria preliminary review, monitoring and identifying abnormal matters to derive preliminary audit conclusions. Utilizing blockchain systems to manage various audit data, comprehensive, systematic, and structured collection, conducting global, systematic, all-round, and structural review and analysis to screen out abnormal and extreme data reduce the subjective assumptions in manual reviews, analyze the priority and severity of issues, and save substantial economic resources.

It will significantly enhance audit efficiency and improve the quality of audit reports, enabling limited audit personnel to concentrate human and material resources on substantive reviews key points (Chen Hua, Hu Xiaolong, 2020)4.

VI. "Blockchain + Audit": Transformation and Reconstruction of Internal Control and Risk Management in the Digital Intelligence Era

(I) Innovation in Audit Operation Models:

"Real-time auditing" and "intelligent auditing" will become future development directions. Blockchain technology plays a significant role in enhancing audit efficiency and providing real- it has unparalleled advantages in areas such as real-time payment and clearing services, ensuring the authenticity and reliability of audit data, and expanding the scope of audits.

In the blockchain network system, auditors collect financial data from audited entities in real-time and establish data mining analysis models, conducting continuous, dynamic, and real-time tracking audits of the audited entity's economic business activities to promote the development of the "real-time auditing" model.

Additionally, the programmable nature of blockchain systems enables auditors to design personalized audit procedures based on the specific circumstances of the audited entity computational models, enhance the level of intelligence in audit work, promote the transformation of the "intelligent audit" model, and improve audit efficiency and audit quality report quality.

(II) Innovation in Audit Risk Prevention and Control System:

Blockchain Platform Online Real-time Audit Risk Assessment and Early Warning Auditors can utilize blockchain during audit activities to the system acquires structured data with systematic frameworks from financial information, as well as scattered and fragmented unstructured data, employing data mining techniques processing technology forms a relationship graph of the audited entity and its related parties, analyzing industry, regional, and individual characteristics from massive information risk factors enable online real-time risk assessment and early warning.

Simultaneously, utilizing artificial intelligence with progressively enhanced learning capabilities, the block the system automatically identifies indicators exceeding early warning thresholds and registers potential suspicious points as latent risk factors. On this basis, the system will automatically generate generate audit working papers and send them to on-site auditors for verification according to the risk warning level.

On-site auditors utilize the district in blockchain systems, the timestamp function enables the reconstruction of economic business scenarios, facilitating real-time online risk assessment and early warning alongside offline risk management prevention and control are combined.

(III) Integration of Blockchain and Big Data Technologies, Data Analysis Becomes the Core of Auditing

In blockchain systems, the audit process involves auditors utilizing the data information provided by the blockchain to design corresponding intelligent audit procedures the program analyzes audit data, and auditors make audit evaluations and draw audit conclusions based on the data analysis.

Data analysis will become the core tool for "blockchain + audit." Due to the relatively weak statistical analysis capabilities of blockchain technology itself, big data technology encompasses a large number of data analysis, storage, and processing techniques, and the organic integration of blockchain technology with big data technology is "The integration of blockchain and auditing" represents an inevitable trend for future development, which will significantly enhance the value of blockchain data and expand its application scope.

In the future, "block the development of "blockchain + big data" auditing services will manifest the following process: acquiring massive, authentic, and credible data through the blockchain network system relying on data to provide raw data support for auditing, and utilizing big data analysis technology to conduct quantitative and qualitative analysis of the audited entity's data sexual analysis, accurately identifying audit clues.

In summary, the essence of enterprise internal control management lies in risk control. Therefore, enterprises must strengthen risk management capabilities in the context of "Internet+", "Intelligence+", and "Blockchain+" environments under the "chain+" background, it is even more crucial to uphold risk prevention awareness, achieve effective identification and evaluation of risks, and address existing issues in internal control topic: Identify the potential factors that trigger enterprise risks, analyze their specific impact levels, formulate a detailed risk inventory, and integrate based on the practical experience of this enterprise in risk prevention, a risk case database has been established to further improve the enterprise's internal control risk system.

"Accelerating digital development and building a digital China" is an important component of the national 14th Five-Year Plan and the Long-Range Objectives Through the Year 2035 one of the aspects. Enterprise internal control and risk management also face opportunities and challenges brought by digital transformation.

Digitalization, networking, and intelligentization digitalization will help enterprises achieve more rigorous, timely, precise, and efficient internal control. During digital transformation, enterprises should continuously improve strengthen the functions of internal control and risk management, continuously enhance the effectiveness of internal control, and support the high-quality development of enterprises.

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