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Process Control NFTs
The "Lego Building Blocks" of Accounting, Reporting, Audit and Analysis - Moving the Institution of Accountancy Toward Automation

What is a Process Control NFT?

A Process Control NFT is an immutable, transferrable digital representation of a control that automates an accounting, financial reporting, audit or analysis process. A Process Control NFT uses the ERC721 standard on the Ethereum or Polygon blockchain, or other EVM chain.
The ERC721 standard began its initial use case for representing art. Its use is rapidly expanding to music, media, event ticketing, memberships and more.
Process Control NFTs represent the dawn of ERP, accounting and reporting infrastructure for the modern enterprise. The Auditchain Protocol is a representation of the first use case for internal and external enterprise process automation and assurance infrastructure. We like to call them Lego Building Blocks for accounting, reporting, audit and analysis.
Anyone can create a Process Control NFT so long as they have knowledge of these processes. Process Control NFTs are externally validated on the Auditchain Protocol. Every time they are used, the creator and the validators who validated them get paid a royalty. Neat, huh?
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Getting Started

We will launch the Auditchain Protocol with an existing library of controls that automate financial reporting and financial report validation. These controls are based on the XBRL Global Standard Syntax. XBRL is the language and dialect of global regulators.
As we build the UI that provides the code free ability to create controls, developers building under the specifications of accountants or professionals with intimate knowledge of accounting logic will develop raw XBRL files and commit them to the library.
The creation UI will provide a few constraints to keep users on the right track based on the type of control a user is developing. If you can create a .xls formula, you can create a control. A drop down list of default control types is provided which then allows the user specify the attributes of the selected control type. Once the user has selected the control type and its attributes, the user will enter other URIs to associate other controls with the new control. The user will name the control and enter the description of the control and also enters its title.
Every accountant knows the accounting equation. Equity=Assets+Liabilities. This simple logic is the over arching control that governs other accounting controls.
Upon submission, Pacioli begins processing the output of the control in the form of one or more XML files containing all of the attributes of the control with a payload of the other URIs to other XML files that the control refers to in order to achieve the functional objective of the newly created control. The Auditchain Virtual Machine accepts the submission process along with all of the attributes of the new control using the SHA-256 hashing algorithm provided that the logic complies with the other controls AND the accounting equation.

External Validation

The newly created control is then submitted to the cohort of external validators running the AVM client; which we lovingly call "Pacioli" for validation under the IASE 3402 engagement standard. The control is processed by the external validators to verify that the control (i) works properly, (ii) does not conflict with or break other controls and (iii) complies with specified logical and functional objectives.
When consensus of the cohort is reached that the control meets the conditions of the specified objectives, a validation is outputted and recorded by the EVC. The EVC triggers the settlement in AUDT and also enables the creator to claim the Process Control NFT.
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Attributes of Process Control NFTs

The NFT represents ownership of the control and points to an immutable URI on IPFS. The payload of the file linked by the URI contains the control and all other relative URIs as well as metadata that states; the creator's name and Ethereum address, name of each of the external validators and their Ethereum address, the EVC cohort address and the Merkle root which is the basis of the Proof of Assurance, "PoA".
The magic of this process and the use of the NFT format allows creators and validators to get paid each time the control is used on the Auditchain Protocol. This incentivizes the creation of more controls which enables global disclosure frameworks to move from periodic sprints to a continuous audit and near real time financial reporting framework that is suitable for open ledger based blockchain and DeFi systems and decentralized autonomous organizations.

Knowledge Graphs

Proof of Assurance "PoA" is a critical piece of the knowledge graph populated during the control creation process. The control creation process populates a knowledge graph that associates all of the attributes of the control and includes the attributes in the metadata section of the control. As the controls are consumed by other actors, the knowledge graphs become extremely useful. Actors can create additional controls (subgraphs) that become part of other knowledge graphs created by them that play a critical role in communicating accounting, audit, financial reporting and analysis logic and information in a machine-readable way.
The knowledge graph is also critical for reporting entities and auditors who are involved with financial statement audits in Europe which must include machine-readable data and logic as well as human readable rendering of financial statements under CEAOB guidelines.
Congratulations! You just performed computational professional services that populated the AVM with a new consumable control which you now own! Every time that new control used, you and each of the members of your EVC cohort who attested to the effectiveness of the control will receive AUDT as a royalty.
Do you REALLY want to perform manual accounting work for 10-12 hours a day for the rest of your career? Or do you want to come with us, get a life and change the world?

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On this page
What is a Process Control NFT?
Getting Started
External Validation
Attributes of Process Control NFTs
Knowledge Graphs