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Digital Assets: Considerations for Existence, Rights, & Obligations, and Valuation

July 2nd, 2024
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SERVICE: Audit & Assurance
INDUSTRY: Small & Midsize Businesses
The practice aid, Accounting for and Auditing of Digital Assets, will be updated soon to include two new auditing chapters covering key assertions for consideration when performing engagements involving digital assets:
  • Considerations for existence, rights & obligations
This chapter not only provides audit procedures that may be performed for digital assets that are both self-custodied and held by third parties, but it also includes guidance related to evaluating the reliability of information obtained from a blockchain. In addition, guidance includes three approaches that auditors might take to obtain information from a blockchain, and considerations for digital asset confirmations.employee benefit plan meeting
  • Considerations for valuation
This chapter provides considerations for procedures that an auditor may consider when measuring digital assets using prices in active or thinly traded markets. For those digital assets that are accounted for as indefinite-lived intangible assets, considerations are included to evaluate the entity’s impairment analysis. In addition, there are a number of procedures included that may be considered to be performed when an entity sells or exchanges its digital assets and recognizes realized gains or losses. In order to provide more pointed guidance, these chapters are in Q&A format. In addition to the new chapters, Appendix B, Staff Accounting Bulletin No. 121, was expanded to include an auditing Q&A that contains procedures that may be performed in response to identified risks of material misstatement associated with safeguarding liabilities and safeguarding assets recorded in accordance with Staff Accounting Bulletin No. 121. See the Fall 2023, Spring 2022, and Spring 2021 PR Prompts for more background on the practice aid, and additional AICPA resources specific to both blockchain and digital assets.
If you have any questions regarding digital assets and additional considerations for peer reviews, please reach out to our Peer Review experts at maner@manercpa.com or by calling us directly at 517-323-7500.