Northern Trust, a top custody bank based in the U.S has partnered with PwC to push for large-scale adoption of a blockchain-based platform for private equity funds.
In collaboration with “Big Four” accounting company PwC, the bank presented new tools on Monday, thus giving the auditors of private equity fund quick access to data stored on its private blockchain. Instead of waiting for periodic reports about the actions taken by the fund manager, auditors will instantaneously be able to get the information.
In an interview with CoinDesk, the Northern Trust president of corporate and institutional services, Pete Cherecwich said that they had taken and updated the manual and periodical processes. He also said that this would be done on a daily basis in an automated manner.
Although the blockchain platform is currently used by just one Northern Trust client, Unigestion, a Swiss investment manager, Cherecwich highlighted the new capabilities as a way to help attract more users.
The Northern Trust blockchain audit tools begin by giving auditors access to a specially designed node on the bank’s authorized blockchain.
By using this software, the private equity fund auditors can access read-only files in almost real-time, when the shares are bought and sold between limited partners and general partners when the investment firms call for capital promised by investors, as well as when capital gains are distributed.
These auditors can choose to transfer the essential data into their applications so that the audit process is complete or they can also develop their tools and carry out the auditing directly from the blockchain. The permission to audit the different funds is controlled by a smart contract technology of which the Northern Trust is said to have a pending patent with.
Future of audits
The transparency and immutability of blockchain have long proven attractive attributes to the accountants who are innovation-oriented.
Every one of the Big Four accounting companies, PwC, EY, KPMG, and Deloitte, released a report on the role of blockchain in future auditing.
New York-based Libra is one of the early movers to adopt blockchain in accounting. Libra partnered with PwC and launched its enterprise blockchain auditing software back in 2016.