DISC InfoSec blogInternal Audit Archives

Jan 24 2026

Smart Contract Security: Why Audits Matter Before Deployment

Category: Information Security,Internal Audit,Smart Contract — disc7 @ 12:57 pm

Smart Contracts: Overview and Example

What is a Smart Contract?

A smart contract is a self-executing program deployed on a blockchain that automatically enforces the terms of an agreement when predefined conditions are met. Once deployed, the code is immutable and executes deterministically – the same inputs always produce the same outputs, and execution is verified by the blockchain network.

Potential Use Case

Escrow for Freelance Payments: A client deposits funds into a smart contract when hiring a freelancer. When the freelancer submits deliverables and the client approves (or after a timeout period), the contract automatically releases payment. No intermediary needed, and both parties can trust the transparent code logic.

Example Smart Contract

// SPDX-License-Identifier: MIT
pragma solidity ^0.8.20;

contract SimpleEscrow {
    address public client;
    address public freelancer;
    uint256 public amount;
    bool public workCompleted;
    bool public fundsReleased;

    constructor(address _freelancer) payable {
        client = msg.sender;
        freelancer = _freelancer;
        amount = msg.value;
        workCompleted = false;
        fundsReleased = false;
    }

    function releasePayment() external {
        require(msg.sender == client, "Only client can release payment");
        require(!fundsReleased, "Funds already released");
        require(amount > 0, "No funds to release");
        
        fundsReleased = true;
        payable(freelancer).transfer(amount);
    }
}

Fuzz Testing with Foundry

// SPDX-License-Identifier: MIT
pragma solidity ^0.8.20;

import "forge-std/Test.sol";
import "../src/SimpleEscrow.sol";

contract SimpleEscrowFuzzTest is Test {
    SimpleEscrow public escrow;
    address client = address(0x1);
    address freelancer = address(0x2);

    function setUp() public {
        vm.deal(client, 100 ether);
    }

    function testFuzz_ReleasePayment(uint256 depositAmount) public {
        // Bound the fuzz input to reasonable values
        depositAmount = bound(depositAmount, 0.01 ether, 10 ether);
        
        // Deploy contract with fuzzed amount
        vm.prank(client);
        escrow = new SimpleEscrow{value: depositAmount}(freelancer);
        
        uint256 freelancerBalanceBefore = freelancer.balance;
        
        // Client releases payment
        vm.prank(client);
        escrow.releasePayment();
        
        // Assertions
        assertEq(escrow.fundsReleased(), true);
        assertEq(freelancer.balance, freelancerBalanceBefore + depositAmount);
        assertEq(address(escrow).balance, 0);
    }

    function testFuzz_OnlyClientCanRelease(address randomCaller) public {
        vm.assume(randomCaller != client);
        
        vm.prank(client);
        escrow = new SimpleEscrow{value: 1 ether}(freelancer);
        
        // Random address tries to release
        vm.prank(randomCaller);
        vm.expectRevert("Only client can release payment");
        escrow.releasePayment();
    }

    function testFuzz_CannotReleaseMultipleTimes(uint8 attempts) public {
        attempts = uint8(bound(attempts, 2, 10));
        
        vm.prank(client);
        escrow = new SimpleEscrow{value: 1 ether}(freelancer);
        
        // First release succeeds
        vm.prank(client);
        escrow.releasePayment();
        
        // Subsequent attempts fail
        for (uint8 i = 1; i < attempts; i++) {
            vm.prank(client);
            vm.expectRevert("Funds already released");
            escrow.releasePayment();
        }
    }
}

Run the fuzz tests:

forge test --match-contract SimpleEscrowFuzzTest -vvv

Configure fuzz runs in foundry.toml:

[fuzz]
runs = 10000
max_test_rejects = 100000

Benefits of Smart Contract Audits

Security Assurance: Auditors identify vulnerabilities like reentrancy attacks, integer overflows, access control flaws, and logic errors before deployment. Since contracts are immutable, catching bugs pre-deployment is critical.

Economic Protection: Bugs in smart contracts have led to hundreds of millions in losses. An audit protects both project funds and user assets from exploitation.

Compliance & Trust: For regulated industries or institutional adoption, third-party audits provide documented due diligence that security best practices were followed.

Gas Optimization: Auditors often identify inefficient code patterns that unnecessarily increase transaction costs for users.

Best Practice Validation: Audits verify adherence to standards like OpenZeppelin patterns, proper event emission, secure randomness generation, and appropriate use of libraries.

Reputation & Adoption: Projects with reputable audit reports (Trail of Bits, OpenZeppelin, Consensys Diligence) gain user confidence and are more likely to attract partnerships and investment.

Given our work at DISC InfoSec implementing governance frameworks, smart contract audits parallel traditional security assessments – they’re about risk identification, control validation, and providing assurance that systems behave as intended under both normal and adversarial conditions.

DISC InfoSec: Smart Contract Audits with Governance Expertise

DISC InfoSec brings a unique advantage to smart contract security: we don’t just audit code, we understand the governance frameworks that give blockchain projects credibility and staying power. As pioneer-practitioners implementing ISO 42001 AI governance and ISO 27001 information security at ShareVault while consulting across regulated industries, we recognize that smart contract audits aren’t just technical exercises—they’re risk management foundations for projects handling real assets and user trust. Our team combines deep Solidity expertise with enterprise compliance experience, delivering comprehensive security assessments that identify vulnerabilities like reentrancy, access control flaws, and logic errors while documenting findings in formats that satisfy both technical teams and regulatory stakeholders. Whether you’re launching a DeFi protocol, NFT marketplace, or tokenized asset platform, DISC InfoSec provides the security assurance and governance documentation needed to protect your users, meet institutional due diligence requirements, and build lasting credibility in the blockchain ecosystem. Contact us at deurainfosec.com to secure your smart contracts before deployment.

At DISC InfoSec, we help organizations navigate this landscape by aligning AI risk management, governance, security, and compliance into a single, practical roadmap. Whether you are experimenting with AI or deploying it at scale, we help you choose and operationalize the right frameworks to reduce risk and build trust. Learn more at DISC InfoSec.

Tags: Smart Contract Audit

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Dec 03 2025

Why Auditing AI Is Critical for Responsible and Secure Adoption

Category: AI,AI Governance,Internal Audit — disc7 @ 1:51 pm

Managing AI Risks Through Strong Governance, Compliance, and Internal Audit Oversight

Organizations are adopting AI at a rapid pace, and many are finding innovative ways to extract business value from these technologies. As AI capabilities expand, so do the risks that must be properly understood and managed.
Internal audit teams are uniquely positioned to help organizations deploy AI responsibly. Their oversight ensures AI initiatives are evaluated with the same rigor applied to other critical business processes.
By participating in AI governance committees, internal audit can help set standards, align stakeholders, and bring clarity to how AI is adopted across the enterprise.
A key responsibility is identifying the specific risks associated with AI systems—whether ethical, technical, regulatory, or operational—and determining whether proper controls are in place to address them.
Internal audit also plays a role in interpreting and monitoring evolving regulations. As governments introduce new AI-specific rules, companies must demonstrate compliance, and auditors help ensure they are prepared.
Several indicators signal growing AI risk within an organization. One major warning sign is the absence of a formal AI risk management framework or any consistent evaluation of AI initiatives through a risk lens.
Another risk indicator arises when new regulations create uncertainty about whether the company’s AI practices are compliant—raising concerns about gaps in oversight or readiness.
Organizations without a clear AI strategy, or those operating multiple isolated AI projects, may fail to realize the intended benefits. Fragmentation often leads to inefficiencies and unmanaged risks.
If AI initiatives continue without centralized governance, the organization may lose visibility into how AI is used, making it difficult to maintain accountability, consistency, and compliance.

Potential Impacts of Failing to Audit AI (Summary)

The organization may face regulatory violations, fines, or enforcement actions.
Biased or flawed AI outputs could damage the company’s reputation.
Operational disruptions may occur if AI systems fail or behave unpredictably.
Weak AI oversight can result in financial losses.
Unaddressed vulnerabilities in AI systems could lead to cybersecurity incidents.

My Opinion

Auditing AI is no longer optional—it is becoming a foundational part of digital governance. Without structured oversight, AI can expose organizations to reputational damage, operational failures, regulatory penalties, and security weaknesses. A strong AI audit function ensures transparency, accountability, and resilience. In my view, organizations that build mature AI auditing capabilities early will not only avoid risk but also gain a competitive edge by deploying trustworthy, well-governed AI at scale.

Governance in The Age of Gen AI: A Director’s Handbook on Gen AI

Tags: AI Internal Audit

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Mar 28 2025

Preparing for an ISO Audit: Essential Tips and Best Practices for a Successful Outcome

Category: Information Security,Internal Audit,ISO 27k — disc7 @ 2:44 pm

”Preparing for an ISO Audit: Tips and Best Practices” is a comprehensive guide by AuditCo, published in February 2025, aimed at assisting organizations in effectively preparing for ISO audits. The article outlines several key strategies:

Understanding ISO Standards: It emphasizes the importance of familiarizing oneself with the specific ISO standards relevant to the organization.
Conducting a Pre-Audit: The guide recommends performing a self-assessment to identify and address areas of non-compliance before the official audit.
Organizing Documentation: Ensuring that all pertinent documents, such as policies and records, are well-organized and easily accessible is highlighted as a crucial step.
Training Employees: Providing staff with training on the audit process and their respective roles is advised to facilitate a smoother audit experience.
Engaging with Auditors: Establishing open communication with auditors to clarify expectations and address concerns is also recommended.

Additionally, the article suggests best practices like creating an audit checklist, involving top management to demonstrate commitment to compliance, monitoring corrective actions for identified non-conformities, and implementing improvements post-audit to enhance the management system.

For a detailed exploration of these strategies, you can read the full article

Full Preparation Plan for an ISO Audit

1. Understand the ISO Standard :

– Familiarize yourself with the specific ISO standard relevant to your organization (e.g., ISO 27001 for Information Security, ISO 9001 for quality management, ISO 14001 for environmental management, ISO 45001 for occupational health and safety).

– Study the standard requirements and guidelines to fully grasp what is expected.

2. Gap Analysis :

– Conduct a thorough gap analysis to compare your current processes and systems against the ISO standard requirements.

– Identify areas that need improvement and document these gaps.

3. Develop an Implementation Plan :

– Create a detailed plan to address the gaps identified in the gap analysis.

– Assign responsibilities to team members, set timelines, and allocate necessary resources.

4. Training and Awareness :

– Train your employees on the ISO standard requirements and the importance of compliance.

– Ensure that everyone understands their roles and responsibilities related to the ISO standards.

5. Document Control :

– Develop or update documentation to meet ISO requirements, including policies, procedures, work instructions, and records.

– Implement a document control system to manage and maintain these documents efficiently.

6. Internal Audits :

– Conduct internal audits to evaluate your readiness for the ISO audit.

– Identify non-conformities and take corrective actions to address them.

– Internal audits should closely mimic the external audit process.

7. Management Review :

– Hold a management review meeting to assess the effectiveness of your ISO management system.

– Ensure top management is involved and committed to the process.

8. Pre-Audit Assessment :

– If possible, conduct a pre-audit assessment with an external consultant to get an objective evaluation of your readiness.

– Use the feedback to make any necessary adjustments before the actual audit.

9. Audit Logistics :

– Coordinate with the external auditor to schedule the audit.

– Prepare all necessary documentation and ensure key personnel are available during the audit.

10. Continuous Improvement :

– ISO audits are not a one-time event. Implement a culture of continuous improvement to maintain compliance and enhance your management system.

– Regularly review and update your processes and systems to ensure ongoing compliance.

ISO 27001 INTERNAL AUDITS & DATA PROTECTION: STRENGTHENING COMPLIANCE & SECURITY: A Practical Guide to Conducting Internal Audits and Safeguarding Sensitive Data (ISO 27001:2022)

Tags: ISO 27001 Internal Audit, ISO Audit Plan

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Feb 25 2025

Difference Between Internal and External Audit

Category: Internal Audit — disc7 @ 8:42 am

Feature	Internal Audit	External Audit
Objective	Evaluates internal controls, risk management, and compliance to improve efficiency.	Provides an independent opinion on financial statements and compliance with regulations.
Conducted By	Internal employees or outsourced auditors reporting to management or the board.	Independent third-party auditors hired by shareholders or regulators.
Focus	Operational effectiveness, risk management, and compliance.	Accuracy and fairness of financial statements.
Regulation	Not legally required but recommended for governance.	Mandatory for public companies and regulated entities.
Frequency	Ongoing, conducted throughout the year.	Typically conducted annually.
Reporting	Reports to management and the board (Audit Committee).	Reports to shareholders and regulatory authorities.
Independence	May lack full independence due to internal employment.	Fully independent from the organization.

Internal audits help improve internal processes, while external audits ensure compliance and financial integrity. First party audits, known as internal audits, consider the effectiveness and efficiency of the Management System, whereas external audits consider only the effectiveness of the Management System.

ISO certification training courses.

ISMS and ISO 27k training

Tags: External Audit, Internal audit

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