Page 53 - CMA Journal (Jul-Aug 2026)

F oc us S ec t ion

Transactions are grouped into blocks and Immutable Audit Trails Challenges to Adoption procurement; and sustained political support is
cryptographically linked to previous records. Any Every signi cant procurement action can be Blockchain is not a universal solution, and governments essential.
attempt to alter an earlier record would disrupt the time-stamped and recorded, creating a permanent should approach adoption with realistic expectations. The Way Forward
chain and require changes across the distributed evidence trail. This could enable auditors to follow the
network. The rst challenge is scalability and interoperability. The future of blockchain-enabled procurement will
procurement process from tendering through contract Blockchain networks may process transactions more likely involve integration with other emerging
Several characteristics make blockchain particularly award, implementation and payment. slowly than conventional centralized databases, while technologies. Arti cial intelligence can analyze
relevant to public procurement:
The result would be a shift from an audit model that di erent platforms may not easily communicate with blockchain records to identify risks and predict unusual
Immutability: Once a transaction is recorded, it primarily asks "What happened?" after the event to one one another. Public-sector organizations may also lack procurement behavior. Digital twins can combine
Introduction practices can result in becomes a permanent and tamper-evident part of the the technical expertise required to design, operate and blockchain-based data integrity with virtual
in ated prices, poor- that increasingly allows auditors to monitor "What is
Public procurement represents a signi cant share of quality infrastructure, procurement record. happening?" during the process. maintain these systems. representations of supply chains, supporting
economic activity in many countries, accounting for abandoned projects and Transparency: Authorized stakeholders, including Fraud Detection The second challenge is organizational resistance. procurement planning and scenario analysis.
approximately 12% to 30% of GDP in numerous ine cient use of public auditors and oversight bodies, can potentially trace Introducing blockchain can disrupt established For governments considering adoption, a gradual
economies. It is therefore not merely an administrative resources. procurement transactions and their history. Blockchain can also complement arti cial intelligence processes and require o cials to acquire new skills. approach is likely to be more e ective than attempting
function; it is an important economic and social Decentralization: Distributed records reduce reliance and machine learning. Immutable transaction records Legacy systems, limited digital literacy and unrealistic an immediate transformation of the entire procurement
instrument through which governments convert public One fundamental on a single database or administrator and minimize can provide reliable data for analytical systems designed expectations about the technology can further system. Pilot projects can rst target speci c areas such
resources into infrastructure, goods and services. weakness is centralization. single points of failure. to identify unusual bidding patterns, suspicious supplier complicate implementation. as supplier veri cation, bid submission or contract
However, public procurement is also among the Procurement decisions Cryptographic security: Cryptographic techniques can relationships, unusually high prices or inconsistencies The third challenge is legal uncertainty. Questions monitoring. Lessons from these pilots can then inform
government functions most vulnerable to corruption, are often concentrated help authenticate transactions and verify identities. between contracts and payments. remain regarding the legal status of smart contracts, broader implementation.
creating substantial nancial losses and undermining among a relatively small Supplier Veri cation liability, dispute resolution, data protection, privacy and At the same time, procurement laws and regulations
public con dence in institutions. number of o cials, Continuous auditability: Because procurement A blockchain-based supplier credential system could cross-border transactions. Procurement legislation must need to recognize digital records, smart contracts and
creating opportunities activities can be recorded as they occur, blockchain can new approaches to veri cation and auditing. Training
Traditional procurement systems face several persistent support more continuous and automated forms of allow veri ed quali cations and identities to be evolve alongside technological capabilities. programs should equip procurement o cials, auditors,
weaknesses, including lack of transparency, for abuse and making auditing rather than relying entirely on periodic reviews. accessed by di erent procuring entities. This could Finally, there is an institutional and governance accountants and technology professionals with the skills
manipulation of records, bid rigging, collusion, accountability di cult to For governments, the objective is not necessarily to reduce duplication in veri cation and make it more challenge. Blockchain cannot compensate for weak required to work within these new systems.
favoritism and inadequate audit trails. Paper-based and establish. A centralized system also creates a single place all procurement information on a completely di cult for suppliers to rely on false or outdated institutions, inadequate oversight or a lack of political
centralized electronic systems can leave records point of failure: individuals with su cient access may public blockchain. Permissioned or consortium-based credentials. commitment. If the institutions responsible for Conclusion
vulnerable to alteration or deletion by individuals with potentially modify, delete or fabricate records. blockchain architectures may provide a more practical Supply Chain Traceability procurement are unwilling or unable to enforce rules, a Blockchain presents a promising opportunity to
authorized access. Moreover, conventional audits are A second weakness is limited transparency. Information balance between transparency, privacy and Blockchain can also extend beyond contract award. By technologically sophisticated ledger will have limited strengthen public procurement by addressing three
often retrospective, meaning that irregularities may only concerning tenders, evaluation criteria, contract awards administrative control. recording transactions across the supply chain, impact. longstanding weaknesses: manipulation of records, lack
be identi ed after public funds have already been spent. and supplier performance may not always be readily governments can potentially monitor whether procured Emerging International Experience of transparency and inadequate audit trails. Its ability to
The introduction of e-procurement has improved accessible to citizens, oversight institutions or other Practical Applications in Public goods meet speci ed quality, safety and sustainability create tamper-evident, transparent and traceable
records could signi cantly improve the integrity of
e ciency and accessibility, but it has not completely stakeholders. This creates information asymmetry and Procurement requirements. This is particularly relevant for complex International initiatives illustrate both the potential and procurement processes.
resolved concerns relating to data integrity, makes external scrutiny more di cult. The potential of blockchain becomes clearer when procurement involving multiple suppliers and limitations of blockchain-based public procurement and Yet blockchain should not be presented as a
transparency and accountability. Centralized databases A third concern is the retrospective nature of auditing. considered across the procurement cycle. intermediaries. nancial administration. technological cure for corruption. Its e ectiveness
remain vulnerable to cyberattacks and unauthorized Traditional audits generally examine transactions after Secure Bid Submission The Philippines has pursued blockchain-based public depends on the quality of institutions surrounding it.
access, while procurement processes can sometimes they have occurred. By the time an irregularity is Blockchain can provide cryptographic timestamping for Bene ts Beyond Technology nancial administration, with an initiative designed to Scalability, interoperability, organizational resistance,
operate as "black boxes", limiting the ability of discovered, funds may already have been disbursed and bids. Once submitted, a bid can be recorded in a manner A blockchain-enabled procurement system could cover stages of the budget cycle from approval and legal uncertainty and limited institutional capacity
stakeholders to understand how decisions are made. deliver several broader bene ts. These include greater expenditure to disbursement and reporting. The remain signi cant barriers. Successful implementation
the opportunity to prevent the loss may have passed. that makes subsequent alteration highly di cult. Bids underlying objective is to create permanent digital
Blockchain technology o ers a potentially important E-procurement has addressed some of these may remain encrypted until the designated opening or transparency, reduced opportunities for fraud, records of public spending. will therefore require a combination of technological
response to these weaknesses. By maintaining auction stage, helping preserve con dentiality while improved administrative e ciency, stronger innovation, legal reform, institutional strengthening,
capacity development and political commitment.
distributed, tamper-evident and auditable records, administrative ine ciencies, but digitization does not maintaining an immutable record of submission. accountability and more reliable data for Research concerning Costa Rica's SICOP procurement
highlights
another
important
lesson:
system
blockchain can strengthen the integrity of procurement automatically guarantee integrity. A centralized digital This can reduce disputes over whether a bid was decision-making. technological implementation can encounter Ultimately, transparent public procurement is not
information and create a more transparent database can still be manipulated by an authorized submitted on time or subsequently modi ed and can For nance professionals and auditors, one of the most signi cant cultural and organizational barriers. Similarly, simply a technological objective. It is a matter of public
environment. However, technology alone cannot administrator or compromised by a cyberattack. The strengthen con dence in the procurement process. important bene ts may be the improvement in the research from Thailand has demonstrated the potential trust. Governments use citizens' resources to deliver
eliminate corruption. Its e ectiveness depends on underlying challenge is therefore not simply to digitize Smart Contracts quality and reliability of the audit trail. A permanent use of blockchain and smart contracts in procurement services, infrastructure and essential goods, and citizens
have a legitimate interest in knowing how those
appropriate legal frameworks, institutional capacity, procurement, but to create records that can be Smart contracts are computer programs that record can strengthen the evidence available to auditors committee selection, while India's Blockchain India resources are allocated and spent. Blockchain can help
governance arrangements and political commitment. independently veri ed and are extremely di cult to automatically execute prede ned terms once speci ed and oversight bodies, while automated processes can create a stronger foundation for transparency and
manipulate. conditions are met. In public procurement, they could Challenge is intended to encourage blockchain-based
Why Traditional Procurement Remains potentially automate budget commitment checks, bid reduce opportunities for unauthorized intervention. solutions for digital governance. integrity, but the real challenge is to build the legal,
Vulnerable How Blockchain Can Strengthen validation, contract execution and selected However, it is important to distinguish transparency These experiences point towards ve practical lessons: institutional and governance structures capable of
turning that technological potential into meaningful
Procurement performance-monitoring processes. from accountability. Blockchain can make it much governments should begin with focused pilot projects;
Corruption in public procurement can take many forms, harder to conceal what happened, but it cannot by itself blockchain should be integrated with other accountability.
including bid rigging, kickbacks, con icts of interest, Blockchain is a form of distributed ledger technology in Such automation can reduce administrative delays and ensure that individuals responsible for wrongdoing are technologies rather than treated as a standalone About the Author: Muhammad Junaid Moeen holds an MS in Software
manipulation of supplier speci cations, fraudulent which transactions are recorded across a network rather limit opportunities for manual intervention. It can also investigated or penalized. Technology can preserve solution; organizational barriers can be more di cult Engineering, an MBA, and is a certified Cyber Security professional. He brings over 13
create greater consistency in the application of
years of experience spanning both technical and managerial roles in Pakistan's
contracts and alteration of procurement records. These than being maintained solely by a central authority. than technical ones; permissioned or consortium telecommunications sector. Currently pursuing a PhD at INTI International University,
procurement rules. evidence; institutions must act upon that evidence. architectures may be appropriate for public Malaysia, his research focuses on integrating advanced technical performance with
strategic management in telecommunications infrastructure.
ICMA’s Chartered Management Accountant, Jul-Aug 2026 51