By Abigail Draper, OSCPA communication & engagement manager
Since the outbreak of E. coli on romaine lettuce in 2018 and 2019, food sellers have been looking for ways to more efficiently track where their products come from.
Blockchain, it turns out, is a possible solution.
“The wholesale side has to deal with multiple companies, different stakeholders, regulators, governmental bodies, and (blockchain) is a platform that makes sure the information or the products themselves get from point A to point B with a traceable path,” said Sean Stein Smith, CPA and blockchain expert.
This type of food tracking has become especially important with the outbreak of the coronavirus.
“The coronavirus is a great example of how having more point to point real-time transparent tracking of these goods from their manufacturer wholesale points to the end-user can be helpful in a number of ways,” Smith said. “It would be really helpful to be able to track every crate, freighter and piece of merchandise that has passed through a province or area that has been impacted by it.”
Walmart is one of the big companies that has already implemented blockchain to track their food supplies. Each of their suppliers of leafy greens is required to digitally share information about these plants on the secure and trusted blockchain platform, said Walmart. That way, they can track your arugula from farm to table.
So, what does this mean for CPAs?
“Anybody who's involved in any sort of food transportation or production for Walmart is going to have to be on this blockchain. So, even if you're a small or mid-size regional firm whose clients don't include companies like Walmart, you can easily have clients or be connected in some other way with a company that is part of the Walmart supply chain,” Smith said. “So, you may need to be aware of and work with this blockchain as it gets integrated into your clients’ businesses.”
Firms also need to think about the general implications of auditing a blockchain like this. Smith said there are three questions to consider in this regard:
Smith said those questions remain largely unanswered and firms need to determine what works best for them. He predicts that as blockchain has evolved so rapidly in the past two years, it will continue to do so in the next two years, so he hopes for a more standardized process for auditing blockchain in the future.
“One big question overhanging the entire audit space right now is, what counts as audit evidence now in a blockchain-based environment with smart contracts and other blockchain applications?” Smith said. “We're starting to get some answers put together, but there has not been too much in the way of any guidance either at the FASB or with a new GAAS update.”
Have you worked with auditing a blockchain in the food, wholesale or other industry? Let us know what processes have worked for you in the comments!
OSCPA offers a variety of courses to enhance your understanding of blockchain technology. For details, visit my.ohiocpa.com.