Smart Contract Advisory
Smart Contract Advisory
Kevin Schalk
CPA
Partner
Russell Sommers
CPA, CISA
Partner
Christopher J. Tait
MBA, CISA, CCSK, CFSA
Principal
Smart contracts are innovative auto-executing agreements built on the blockchain. They automate workflow and process large volumes of transactions with minimal human involvement. They’re governed by rules that both contracting parties establish and agree upon, then are executed on a blockchain with a permanent, transparent record of the transaction. Baker Tilly has developed a governance framework for smart contract creation and management, enabling companies to understand their risk, monitor results and develop and maintain their contracts securely.
As a leading CPA advisory firm, Baker Tilly can give you the full scope of support, translating our knowledge of traditional operations to the forefront of industry innovation. Our digital assets team is prepared to help you target risks, integrate processes with ease and get the most out of your smart contract implementation.
Smart contract five-step framework
To establish quality and precise processes, we have created a simple five-step framework. Our framework will help you achieve governance requirements, establish data integrity, maximize profitability, protect the smart contract users and ensure internal flexibility and evolution with the ever-changing smart contract processes.
- Smart contract governance
- Data quality and sourcing
- Define and document metrics
- Interface and code testing
- Change management
Evaluate risks, policies and requirements.
A governance review will allow your company to mitigate common risks and understand what is needed for a successful contract. We do this by:
- Reviewing your policy to understand the rules governing your contracts and internal metrics used to monitor performance
- Reviewing the potential financial and regulatory risks
- Assessing data quality and sourcing
- Evaluating performance metrics and monitoring
- Code review and smart contract “audits”
Analyze the data integrity
For a smart contract to be successful, the necessary data must be available and usable in a timely fashion from trustworthy sources. We encourage our clients to clearly document how they are comfortable with the data’s availability, timeliness, usability and trustworthiness. It is important to ask:
- What is the source of the data?
- What are the business rules governing the data?
- How do you ensure the quality, reliability, availability of the data sources?
- What is the cost of the data?
Maximize your profitability
The ability to define target metrics (e.g., volume, return) will help you prioritize spend and assess program success. Evaluation will include:
- Setting expectations
- Defining target outcomes
- Performing a sensitivity analyses
- Developing forecasts
- Defining ongoing performance requirements
Protect the users
Prior to contract release, a smart contract “audit” can review the code and detect possible security concerns. Testing will include:
- Outsourced smart contract “audit”: planning and coordinating with vendors
- Reviewing the code with fuzzing tools to identify issues prior to issuance
- Intaking results and assessing the impact of change
Evolve with the new processes
Once your smart contract governance process is established, your organization must continue to evolve with the ever-changing ecosystem. We will help you do this by:
- Assessing performance and current state alignment with the goals and strategy
- Planning for future organizational needs
- Designing and implementing new processes
- Ensuring organizational governance standards are being met
Digital assets
Guiding you through the ever-changing digital assets landscape and how it affects you and your organization.