As Canadian companies increasingly hold cryptoassets on their books, auditors must come to grips with incorporating these holdings into their audit work, the Canadian Public Accountability Board (CPAB) says in its August newsletter.
More Canadian reporting issuers are holding material balances of cryptoassets, the auditor oversight group explains. For some companies, cryptocurrency mining is part of their business, while others are holding crypto-assets for investment purposes.
“Auditors must establish sound cryptoasset practices early on to deliver audit quality in this new frontier,” says Carol Paradine, CEO, in a statement.
CPAB says it is consulting with auditors and other experts to assess the audit risks that arise from this development, and how auditors should respond.
At a minimum, auditors examining firms with material balances of cryptoassets should consider issues such as valuation, ownership rights, and the need to understand clients’ business, CPAB says.
“In many cases, they will need to consider engaging specialists in the relevant cryptographic protocols of each material class of crypto-asset held by their client,” CPAB states in the newsletter.
Additionally, auditors will need to test the controls of crypto exchanges and custodians holding cryptoassets on behalf of clients, and consider appropriate valuation procedures.