THE ROLE OF BLOCKCHAIN IN ENSURING AUDITABILITY AND TRANSPARENCY OF NFT TRANSACTIONS IN FINANCIAL REPORTS

As South Africa’s NFT market surged by 180% between 2020 and 2024, the absence of audit-ready reporting frameworks exposed major gaps in ownership verification, valuation consistency, and regulatory compliance. This study explores how blockchain infrastructure, smart contract automation, and NFT ledger traceability enhance auditability and transparency in financial reporting. Justified by the lack of NFT-specific IFRS provisions and increasing investor skepticism, this research used secondary data from 45 entities, analyzed via fixed-effects regression models and diagnostic tests such as ADF, VIF, Durbin-Watson, and Breusch-Pagan. Results revealed that blockchain infrastructure (β = 0.401, p< 0.001), smart contracts (β = 0.368, p< 0.001), and NFT traceability (β = 0.347, p< 0.001) all significantly improved auditability, while regulatory oversight (β = 0.294, p< 0.001) further strengthened compliance. The model explained 81% of the variance (R² = 0.81), and correlation analysis confirmed strong associations, with blockchain infrastructure having the highest correlation (r = 0.89). These findings affirm the critical role of blockchain-enabled systems in transforming NFT financial reporting. The study recommends that firms adopt smart audit contracts, regulators mandate traceability protocols, and international bodies develop NFT-specific accounting standards to support trustworthy and auditable disclosures.