ExpertHard1 markMultiple Choice
CPA · Question 38 · Area I: Information Systems
Which of the following is a risk associated with using a 'Public Blockchain' for financial reporting?
Which of the following is a risk associated with using a 'Public Blockchain' for financial reporting?
Answer options:
A.
Centralized control allows a single entity to manipulate the ledger.
B.
Data is encrypted and cannot be viewed by anyone.
C.
Lack of a central authority makes it difficult to correct erroneous transactions.
D.
It requires a VPN to access.
How to approach this question
Identify the downside of 'Immutability' and 'Decentralization'.
Full Answer
C.Lack of a central authority makes it difficult to correct erroneous transactions.✓ Correct
C
In a public blockchain, the ledger is immutable and decentralized. If a financial transaction is recorded in error, there is no central administrator to 'undo' or 'reverse' it. A correcting entry must be made, but the original error remains visible.
Common mistakes
Thinking public blockchains are private/encrypted by default.
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