A company uses a private blockchain to record supply chain transactions. Which of the following is a unique risk associated with blockchain technology that an auditor should consider regarding financial reporting?

Answer options:

Unauthorized access to the physical server room.

Loss of data due to lack of backups.

Consensus mechanism failure leading to forked chains and inconsistent ledgers.

Inability to export data to Excel.

How to approach this question

Look for the risk that is specific to blockchain technology.

Full Answer

C.Consensus mechanism failure leading to forked chains and inconsistent ledgers.✓ Correct

Consensus mechanism failure leading to forked chains and inconsistent ledgers.

In blockchain, if the consensus mechanism fails or is manipulated (e.g., 51% attack), the ledger can fork, leading to different versions of the truth and impacting the integrity of financial data.

Common mistakes

Selecting general IT risks that apply to any database.

Question 07 All questions Question 09

Practice the full CPA ISC Practice Exam 5

82 questions · hints · full answers · grading

More questions from this exam

Q01A service organization provides a cloud-based payroll processing application to its user entities...Medium Q02An auditor is reviewing the shared responsibility model for a client using an Infrastructure as a...Hard Q03A financial institution requires a cloud deployment model that offers the highest level of contro...Medium Q04During an IT audit, you observe that a company uses a 'Hybrid Cloud' architecture. Which scenario...Medium Q05Which component of IT architecture is primarily responsible for translating domain names (like ww...Easy

View all 82 questions →