If your business provides the option of paying for goods and services with cryptocurrency, it’s important to remember that digital assets must be recognised correctly in accounting.
This requires the accountant to have knowledge about how to recognise digital assets and what accounting method to use.
Auditors must be able to audit cryptocurrency
Companies obliged to audit their annual financial statements must find an auditor who has the ability to audit cryptocurrency. Auditing cryptocurrency requires a different set of knowledge, methods and approaches than conventional currency. There are over 1,000 cryptocurrencies and each one has its own characteristics and particularities. It is therefore extremely important that the auditor is up to date with the field.
Why is auditing cryptocurrency complicated?
Several factors complicate the auditing process: the complexity of cryptocurrency platforms, rapid changes, market volatility, lack of regulations on cryptocurrency and the fact that certain technologies are still evolving.
One issue specifically related to blockchain technology is the “proof-of-work” concept. Traditionally, this was the responsibility of third parties (e.g. a bank) to validate the assets’ identity and value. Third party intervention is no longer required with blockchain technology.
As a result, auditors must call on experts in cryptocurrency technologies to evaluate the proof of existence and ownership of cryptocurrency assets and calculate their value.
Grant Thornton audits cryptocurrencies
In cooperation with its Canadian colleagues, Grant Thornton Baltic has developed a methodology for auditing digital assets and has created a process that is as effective and gets results.