The California Society of CPAs is pushing for lucidity in accounting and revelation rules regarding digital assets and cryptocurrencies, citing a shortfall of precise guidance within United States GAAP, the standard accounting protocols followed in the United States.
The fifty four-member committee’s primary apprehension is the deviation in reporting techniques utilized by companies who itemize crypto assets and digital currencies on their financial statements and whether the changing perspective reveal the nature and dangers of holding digital assets and cryptocurrencies.
This accounting bewilderment is ingrained in the differing methods virtual assets are looked upon, where, depending on the situation, digital currencies may be recorded at lower of market or cost, at fair worth, or as intangible assets. The reason behind this is that on a balance sheet virtual currencies can be reported as anything from a commodity to an investment or even be counted as working capital, as per the co-founder of Alternate Tax Solutions, Andrew Parrish.
Thus far, the Financial Accounting Standards Board remarks that many institutional or Intangibles-Goodwill and Other. Nevertheless, this is far from the consensus, and will only become more imprecise as virtual assets find their means onto more companies’ balance sheets.
In a letter to the FASB Nancy Rix mentioned that they consider the adoption of virtual assets will not lessen over time and will carry on expanding in terms of both volume and new fields of application. It is to be noted that Nancy Rix is the chair of CalCPA’s accounting principles and assurance services committee.
Nevertheless, Parrish mentioned that for now, GAAP policies correctly reflect the risks associated with holding digital assets and cryptocurrencies.