- The Public Company Accounting Oversight Board (PCAOB) has recently issued guidance for the auditors.
- The guidance included the treatment for the crypto assets, including Bitcoin.
- PCAOB’s staff observed that certain digital assets have started to be recorded and disclosed in the issuer’s financial statements.
The Public Company Accounting Oversight Board (PCAOB) has recently issued guidance for the auditors. The PCAOB is apparently a nonprofit corporation that is meant to overlook the audits of several public companies. The guidance included the treatment for the crypto assets, including Bitcoin.
PCAOB aims to keep a watch over the improvement, development and usage of the new technologies. And to inspect their possible implications for the quality of the audit services. PCAOB’s staff observed that certain digital assets have started to be recorded and disclosed in the issuer’s financial statements.
And in certain cases they have observed that there were transactions that were important to the financial statements. Hence it was important for them to focus on the audits that conducted. Hence the guidance highlights certain scope of considerations that the auditors of the issuers need to take into account. However, the guidance doesn’t address any other aspect of the Blockchain and the distributed ledger technology (DLT).
The Responsibilities under the PCAOB Audit Standards:
- At the firm level: Under the PCAOB quality control procedures, the firms should be able to establish a certain set of rules and procedures to decide whether to continue or to stop a client relation and whether to step into a specific engagement with that particular client.
- At Audit Engagement level – Planning: The auditor team should see to the fact whether a specialised skill or knowledge is required for the engagement’s team or not. Different business strategies and technologies may require different types of specialization and techniques. Similarly, the engagement team may require certain skills to apply the legal framework provided by the US Securities and Exchange Commission.
- At Audit Engagement level- Risk assessment: Included PCAOB standards on the risk assessment address. They include identifying and computing the possible risk of misstatement and get a formal understanding of the issuer and its environment which could reveal the type of issuer’s transaction of cryptocurrency. The auditor must also access any related business risks, strategies and objectives of the issuer.
The board committee also said that they understand the effect of the evolving technologies including blockchain and digital assets on the audit firms and committees and the investors. Hence, the PCAOB will continue to inspect the technologies and their implications for PCAOB standards.