California Society of CPAs Demands Greater Clarity in Crypto Accounting and Disclosure Rules
California CPAs have complained against the paucity of clear guidance in U.S. GAAP, which is the base accounting protocol followed in the States. They desire more clarity in accounting and disclosure rules with regard to cryptocurrencies.
The main contention of the committee, which presently consists of 54 members, is the diversity in the reporting methods used by companies who itemize crypto on their financial statements. The committee is unsure if these methods wholly represent the risk of dealing with crypto.
The confusion is the different ways in which digital assets are looked upon. The perception of these assets depends largely on the circumstance in which they are viewed. At fair value, it can be recorded at lower costs in the market or as intangible assets. You can pass off crypto assets as anything really, from working capital to a commodity/investment, says co-founder of Alternate Tax Solutions, Andrew Parrish.
The Financial Accounting Standards Board states that most institutions interpret and define cryptocurrencies as indefinitely-lived intangible assets under ASC 350 or Intangibles – Goodwill and Others. However, this definition isn’t all pervasive across companies and should cause more confusion in the time to come as crypto enters the balance sheets of more and more companies.
Nancy Rix, Chairperson on California CPA’s accounting principles and assurance services committee, stressed in a letter to FASB about her belief that cryptocurrency usage will only gain more mileage with time and expand in volume and the manners in which it is applied.
CalCPA believes that FASB’s current classification model is suited for accounting with foreign currencies. The addition of updated rules would make dealing with other currencies in use already for investment and exchange easier. Rix believes it’s only a matter of time before major public companies begin using crypto as established by the issuance of JP Morgan’s JPM Coin. As such, clear crypto accounting rules will be of utmost necessity.
Gustavo Fonseca loves anything digital and crypto-related which makes him sit up and pay attention. He got into the world of digital marketing and business digital transformation career in 2010. Some time later he got into Crypto, a dynamically developing segment at the intersection of the financial services and technology. Gustavo joined TheDailyCoins in September 2018.