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	ISSUE 3 \| MARCH 2025


	At-A-Glance Digital assets are rapidly becoming prevalent in financial reporting, as was first reported by this publication in 2022. The practice aid released then, Accounting for and Auditing of Digital Assets, has now been updated to reflect developments since that time. This issue of the Audit & Accounting Alert highlights the advances that have been made. Also, our Worldwide Update covers news from organizations across the globe.


	Gerald Herter - Editor


	Accounting for and Auditing of Digital Assets Significant changes in recent times


	The March 2022 Audit & Accounting Alert described a new practice aid, Accounting for and Auditing of Digital Assets, published by the AICPA, that defined and discussed cryptocurrency and non-fungible tokens. This practice aid has now been updated in February 2025, responding to the issuance of (1) the Financial Accounting Standards Board (FASB) Accounting Standards Update 2023-08, Intangibles – Goodwill and Other – Crypto Assets: Accounting and Disclosure of Crypto Assets, and (2) the US Securities and Exchange Commission (SEC) Staff Accounting Bulletin #122, that rescinds SAB No. 121, Accounting for Obligations to Safeguard Crypto-Assets an Entity Holds for its Platform Users. The updated practice aid defines a digital asset as a “digital record that is an asset; is created or resides on a distributed ledger based on blockchain or similar technology; and is secured through cryptography.” Also, blockchain “refers to the broad concept of a decentralized ledger that uses the principles of cryptography to transmit or store value securely.” The accounting section of the practice aid is organized in a series of twenty-eight questions focused on the following areas: 1. Classification, measurement, and recognition How an entity accounts for purchase of digital assets for cash. How an entity recognizes and measures crypto intangible assets. How an entity accounts for indefinite-lived out-of-scope crypto intangible assets subsequent to acquisition. Determining cost basis and carrying value of crypto intangible assets. How to account for sale of crypto intangible assets. How to recognize digital assets held in a third-party hosted wallet service. 2. Investment companies Whether participation in digital asset activities disqualify an entity for classification as an investment company. How an investment company accounts for digital assets. 3. Broker-dealers How to present digital assets held on behalf of customer on financials. How to recognize revenue on digital assets for sales on behalf of customers. How to measure broker-dealer owned digital assets in its proprietary trading portfolio. 4. Fair value measurement Determining principal market. Market factors to consider. Determining fair value in an active principal market. Adjusting fair value to reflect the size of the entity’s holding. Considering impact of a continuous market on fair value and potential impairment. How to determine impact of various factors where principal market is not active. 5. Stablecoins How to account. Special circumstances. 6. Derivatives and embedded derivatives Determination of embedded derivatives. 7. Crypto intangible asset lending and borrowing How to account for loans. 8. Mining Measuring transaction fees. Accounting for mining pools. The audit section of the practice aid is organized in six chapters focused on the following areas: Client acceptance and continuance. Risk assessment and processes and controls. Laws and regulations and related parties. Consideration of an Entity’s Use of a Service Organization. Considerations for existence, rights, and obligations of digital assets. Considerations for valuation of digital assets. These traditional professional audit standards are described in terms of the impact of digital considerations on each area. Though this practice aid is considered nonauthoritative guidance, the AICPA’s Financial Reporting Executive Committee (FinRec) was noted to have reviewed the accounting content and not objected to its issuance, while the auditing content represents views of AICPA staff, utilizing input from the Digital Assets Working Group, as an “other auditing publication” subject to an auditor’s professional judgment. Further evidence of the rising prevalence of digital assets was the launch in January 2025 of a new cryptocurrency coin, the “$TRUMP.” Backed by American President Donald Trump, the $TRUMP has all the hype and risk of other offerings in this emerging new platform. The $TRUMP had a launch price of $6.50, rose to $73, and has since fallen back to around $12. The value appears to rise and fall based on the name and fortunes of Trump himself. Not to be outdone, Trump’s wife, the First Lady, has launched her own crypto coin, the $MELANIA. Further details can be found at Accounting for and auditing of Digital Assets practice aid.


	Worldwide Update Periodic roundup of recent and upcoming actions and activities by auditing and accounting organizations throughout the world.


	International IASB – International Accounting Standards Board (www.ifrs.org) IFRS for SMEs Accounting Standard, third edition issued February 27. 2025, is a major update that includes “a revised model for revenue recognition; bringing together the requirements for fair value measurement in a single location; and updating the requirements for business combinations, consolidations and financial instruments.” IFAC – International Federation of Accountants (www.ifac.org) International Education Standards 2,3,4, revisions issued March 14, 2025, “intend to ensure accountants are equipped to handle sustainability-related disclosure and assurance standards…Revised IES 2 outlines the technical competence learning outcomes, focusing on the application of professional knowledge, while revised IES 3 details the learning outcomes for professional skills. Revised IES 4 specifies the learning outcomes for professional values, ethics, and attitudes.” Effective July 1, 2026. IFR4NPO - International Financial Reporting for Non-Profit Organisations (www.ifr4npo.org) No new developments. IOSCO – International Organization of Securities Commissions (www.iosco.org) Artificial Intelligence in Capital Markets: Use Cases, Risks, and Challenges, consultation report published March 12, 2025, “addresses the rise of Artificial Intelligence (AI) use in capital markets and its impact on investors globally.” ACCA – Association of Chartered Certified Accountants (www.accaglobal.com) AI Monitor: Risk and responsibility, report published February 27, 2025. “The report points out that accountants are uniquely positioned to harness AI's potential while maintaining robust safeguards. But their role in AI risk management extends beyond traditional financial controls. Moving forward, their contribution must reflect a three-layered approach: data, architecture, and business impact.”


	Africa, Europe, India and the Middle East (AEIME) FRC – Financial Reporting Council of the UK (www.frc.org.uk) Introduction to auditing standards, summary document issued March 19, 2025, “setting out the role International Standards on Auditing (ISAs) play in delivering transparent and accountable capital markets, and setting out the process for the development of standards in both the UK and international context.” Guidance on the Going Concern Basis of Accounting and Related Reporting, including Solvency and Liquidity Risks, issued February 25, 2025, as nonmandatory guidance “brings together the requirements and provisions of company law, accounting standards, auditing standards, listing rules, the UK Corporate Governance Code and other regulation relating to reporting on the going concern basis of accounting and solvency and liquidity risks.” ICAEW - Institute of Chartered Accountants in England and Wales (https://www.icaew.com/) Why nature matters to accountants – A guide to building resilience and value through nature-positive action, issued March 3, 2025, “to help address the urgent need for the accounting profession to integrate nature-related issues into its work.” EC – European Commission (https://ec.europa.eu/) No new developments. EFRAG – European Financial Reporting Advisory Group (www.efrag.org) No new developments.


	Americas, Asia, Australia and New Zealand (AAANZ) AICPA & CIMA – American Institute of Certified Public Accountants (www.aicpa.org) 2025 Criteria for Stablecoin Reporting: Specific to Asset-Backed Fiat-Pegged Tokens, issued March 5, 2025, “were established by the Assurance Services Executive Committee (ASEC) of the AICPA for use when reporting on the following, at a specific measurement point in time (collectively, the subject matter): • Presentation and disclosure of the token issuer’s redeemable tokens outstanding and related information; • Presentation and disclosure of the redemption assets available for redeemable tokens outstanding and related information; and • Presentation and disclosure of the comparison of the redemption assets available for redeemable tokens outstanding and the token issuer’s redeemable tokens outstanding, and related information of the comparison FASB – Financial Accounting Standards Board (www.aicpa.org) No new developments. GASB – Governmental Accounting Standards Board (www.gasb.org) Financial Reporting Requirements for State and Local Governments: Evaluating GAAP Choice, study published March 24, 2025. “The study identifies and categorizes state-imposed financial reporting requirements for state, county, municipal, and special district governments. In addition, the study includes a statistical model of the determinants of GAAP choice in the absence of a state requirement to utilize GAAP. COSO - The Committee of Sponsoring Organizations of the Treadway Commission (www.coso.org) No new developments. PCAOB – Public Company Accounting Oversight Board (www.pcaob.org) No new developments. SASB – Sustainability Accounting Standards Board (www.sasb.org) No new developments SEC – Securities and Exchange Commission (www.sec.gov) No new developments


	Additional A&A News How AI will change lease accounting and auditing The digital threat: Why cybersecurity can’t be an afterthought What Empowerment Should Look Like … and Shouldn’t How Gen AI could change the value of expertise 2024 Enforcement Activity Involving Auditors FRC introduces new tool to enhance access to company financial data


	Audit & Accounting Alert is a publication of Integra International intended to highlight emerging issues in the profession. The goal is to give Integra members an awareness of developments impacting the practice of Audit & Accounting enabling them to stay on the forefront of industry trends.This material has been prepared for general informational purposes only and is not intended to be relied upon as accounting, tax, or other professional advice. Please refer to your advisors for specific advice. Editor Gerald E. Herter Email: [email protected] www.Integra-International.net © 2021 Integra International. All Rights Reserved. If you wish to stop receiving email from us, you can simply remove yourself by visiting http://members.integra-international.net/members/EmailOptPreferences.aspx?id=66979517&e=lois.pares@integra-international.net&h=d523ac69369762eb987573d57c33e956f959035d.