The American Institute of CPAs has up to date its follow help for accounting and auditing of digital property, with added materials on cryptocurrency.
The most recent version contains nonauthoritative steerage on cryptoasset lending and borrowing, derivatives and mining. A few of the matters embody evaluating whether or not a contract comprises a by-product or an embedded by-product, how lenders ought to account for the crypto property they’ve loaned, and the way a borrower accounts for cryptoassets borrowed.
Different matters embody how cryptocurrency miners ought to account for transaction charges and block rewards earned by way of their mining efforts, and the way an entity that participates in a mining pool accounts for the association.
Valuing cryptoassets has turn into a fraught subject for buyers and companies alike. Whereas the worth of digital currencies like bitcoin, Ether and Dogecoin have been skyrocketing lately, the market has seen a steep dropoff. One know-how firm that invested closely in crypto property, MicroStrategy, disclosed final week that it had obtained a letter from the Securities and Alternate Fee objecting to the way in which it valued its property, precipitating a pointy drop within the firm’s inventory worth (see story).
The Monetary Accounting Requirements Board provides some restricted steerage on the way to account for such property, however has come below strain to supply extra tangible guidelines. “Cryptoassets won’t meet the definition of money or money equivalents (as outlined within the FASB ASC Grasp Glossary) when they aren’t thought of authorized tender and will not be backed by sovereign governments,” stated the AICPA follow help. “As well as, these cryptoassets usually don’t have a maturity date and have historically skilled important worth volatility.”
Final 12 months, FASB issued an invite to touch upon its analysis agenda and stated in December it’s contemplating potential methods to enhance the accounting for and disclosure of intangibles (see story). Nonetheless, extra particular steerage on crypto would most likely be welcome. In a single remark letter submitted by the Chamber of Digital Commerce, representatives urged the board so as to add standard-setting for digital property and cryptocurrency to the near-term agenda.
The AICPA follow help was first issued in 2019 and is predicated on skilled literature and expertise from members of the AICPA Digital Property Working Group and the AICPA workers. It comprises nonauthoritative steerage on the way to account for and audit digital property below U.S. GAAP for nongovernmental entities along with typically accepted auditing requirements.