AICPA updates practice aid for digital assets

The AICPA updated its practice aid on the accounting for and auditing of digital assets, with new guidance on auditing their valuation and auditing procedures regarding their existence, rights, and obligations.

Accounting for and Auditing of Digital Assets is intended, according to a news release, to provide nonauthoritative guidance under GAAP for nongovernmental entities and GAAS. It should be most useful to practitioners who prepare financial statements and auditors with a fundamental knowledge of blockchain technology.

The updates are:

• Chapter 5, containing considerations for auditing the existence, rights, and obligations of digital assets;
• Chapter 6, containing considerations for auditing the valuation of digital assets; and
• An updated appendix B, which includes an auditing Q&A specific to the SEC’s Staff Accounting Bulletin No. 121 (SAB No. 121), which expresses the staff’s views on how an entity that has an obligation to safeguard digital assets for another party should account for that obligation. This Q&A adds to the existing accounting Q&As for SAB No. 121.

“This updated content adds valuable auditing guidance on testing assertions in these two key areas,” said Ami Beers, CPA, CGMA, senior director­–Assurance & Advisory Innovation for AICPA & CIMA. “While the previous content helped practitioners with the client acceptance and planning and risk assessment phases of an engagement, this new content focuses on guidance for topics such as the different approaches to accessing information from a blockchain, assessing the reliability of that information, and suggested procedures an auditor may consider when an entity measures its digital assets using prices in active or thinly traded markets.”

The practice aid has switched from a narrative structure to a Q&A format to provide more focused guidance on key topics. It was also updated to align with two Statements on Auditing Standards that recently became effective, SAS No. 143 and SAS No. 145.

— To comment on this article or to suggest an idea for another article, contact Kevin Brewer at Kevin.Brewer@aicpa-cima.com.