The Financial Accounting Standards Board (FASB) has issued an exposure draft to address feedback from users, preparers and auditors that crypto currency disclosures needed attention. The proposal would require entities to measure crypto assets at fair value (with adjustments flowing through net income). It would also add disclosures around significant holdings, restrictions, and changes in those holdings. Comments are due June 6!
The AICPA has updated their Practice Aid on Accounting for and auditing of digital assets to address more niche Codification topics. The update includes discussion of accounting for broker dealers as well as investment companies. It also provides guidance on determining principal markets for fair value. The Digital Assets Working Group has been great in providing accounting and auditing guidance for entities as this topic is not well addressed in authoritative literature.
Cryptocurrency is becoming a more recognized transaction with more entities participating in this ecosystem. The AICPA has issued non-authoritative guidance on accounting and auditing digital assets. Current FASB does not have authoritative guidance in this area, so the practice aid addresses some common considerations. In addition, it addresses the questions firms need to address before accepting a client and provides procedures to ensure that digital asset risks are properly identified and an appropriate audit response is performed. We’ll take a high-level look at some of the considerations for those contemplating moving into this area.