Digital Currencies Financial Reporting and Auditing: A New Concern for Accounting Professionals in the Accounting Industry

Abstract

Accounting is a traditional profession of trust, and the financial reporting standards, auditing standards, rules, and regulations guiding accounting professionals' functions in the financial market have been established and have existed for years. Hence, the popularity and increases in businesses holding digital currencies (assets) in their financial statements create concerns for accounting professionals in the accounting industry worldwide. This qualitative study explores digital currencies financial reporting and auditing concerns for accounting professionals in the accounting industry. The study provides insights into the interplay between the accounting profession, standard-setting bodies, digital currencies, and blockchain, offering concerns for financial reporting and audit professionals in the accounting industry. Based on the results of the conducted study, accounting professionals currently face the following concerns and challenges when reporting and auditing organizations holding cryptocurrencies, stablecoins, nonfungible tokens (NFTs), and central bank digital currencies (CBDC in their financial statements, namely the absence of comprehensive and universal financial reporting standards, nonauthoritative auditing standards, the nonexistence of digital currency regulations, heightened digital currencies related crimes, high litigation risks, blockchain technology financial reporting, and auditing. Digital currencies present novelty challenges to accounting professionals that require modifying existing accounting and auditing standards or issuing new ones. Therefore, the study concludes that it is imperative for the International Accounting Standards Board (IASB), Financial Accounting Standards Board (FASB), International Auditing and Assurance Standards Board (IAASB), the American Institute of Certified Public Accountants (AICPA), Security Exchange Commission (SEC) and other global regulators to urgently develop and release comprehensive and uniform global accounting standards, auditing standards and digital currencies regulations to avoid discretionary judgment currently relied upon by accounting professionals in the accounting industry for digital currencies financial reporting and auditing.