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Increased use of cryptocurrencies creates challenges and questions for auditors and audit entities. Peter Mandich considers some emerging issues.
As more companies hold and accept payments in cryptocurrencies, questions around how to account for and audit these assets are becoming more common. Holdings can be large and their value can be volatile, so users of financial statements want to know about them, but there is still a great deal of uncertainty in the financial world around cryptocurrencies.
In established markets, trustworthy counterparties can vouch for assets. But governments or other legal entities do not back cryptocurrencies, which are cross-jurisdictional. As there are no specific accounting requirements for cryptocurrencies in UK or international financial reporting standards, auditors will need to refer to fundamental accounting principles, such as reliance and faithful representation.
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