KPMG Canada, a division of one of the largest accounting firms in the world, has converted part of corporate assets into BTC and ETH to test accounting procedures.
Such solution reflects KPMG Canada’s belief that these cryptocurrencies as a “maturity asset class” can be interpreted in terms of International Financial Reporting Standards (IFRS), and their presence on the balance sheet does not contradict the accounting policies of corporate clients.
In this way, KPMG Canada indirectly forms the practice for the preparation of subsequent audit reports. KPMG said it “did a thorough risk assessment,” including an assessment of the tax implications, before making the decision to add digital assets to the company’s balance sheet.
“The digital asset industry continues to grow and evolve, which is why financial services and institutional investors need to consider cryptocurrencies,” said Kareem Sadek, Co-Head of Crypto Assets and Blockchain at KPMG Canada.
A study by the Association of Certified Professional Accountants of Canada (CPA) notes that accounting policies that are acceptable for BTC and ETH will not be suitable for other cryptocurrencies, as they “have different characteristics, depending on which accounting may also differ.”
In accordance with the latest edition of the Conceptual Framework, cryptocurrency can be considered “an active economic resource that gives the potential right to receive economic benefits.”
According to the recommendations of the IFRS Interpretations Committee, IAS 2 “Inventories” can be applied to the accounting of cryptocurrencies if “holding is carried out for sale in the normal course of business”. An organization may invest in cryptocurrencies for their subsequent sale, in which case the cryptocurrency can be treated as reserves.
The application of the accounting standard IAS 32 “Financial Instruments: Presentation of Information” and the definition of cryptocurrency as a financial asset, in the opinion of the Committee, is unlawful, since in this case it should be used as a medium of exchange, as well as as a monetary unit when determining the price of goods or services .
Recall that in February last year, KPMG, together with BitGo and Coin Metrics, announced the release of a set of products for identifying and managing risks in public blockchains.
Source: Bits
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