Garvit Pvt. Ltd. is an e-commerce company that has recently started using blockchain technology to record customer payments made through cryptocurrency and to execute smart contracts with suppliers. The system is connect

Auditors should consider the appropriate governance and security around the transactions. Although blockchain's core security premise rests on cryptography, there are risk factors associated with it. As blockchain interacts with legacy systems and business partners, concerns related to insecure application programming interfaces (APIs), data confidentiality and privacy cannot be ignored. Weak blockchain application development protocols are something auditors cannot overlook. Similarly, data privacy laws and regulations may be an area of concern as data are communicated across geographic boundaries. Auditors must be able to determine whether the data put on blockchain will expose the enterprise for noncompliance with applicable laws and regulations. In the given situation, Garvit Pvt. Ltd. uses blockchain for cryptocurrency payments and smart contracts integrated with its accounting system. Though management considers it fully secure due to immutability, risks such as private key loss, irreversible errors, API weaknesses, cyber threats, and regulatory uncertainty remain. Hence, the auditor must assess IT controls, legal compliance, and reconciliation processes, as blockchain improves integrity but does not eliminate audit risk.