Bitcoin is not hard to audit if you plan for it. It is hard to audit when the first conversation with your auditor happens at year-end. This guide explains what auditors tend to ask and what to prepare. It is educational and does not give accounting or tax conclusions. Those belong to your own qualified advisers.
Who this is for
Finance controllers, CFOs and the audit committee of a company considering or already holding Bitcoin.
What your auditor will want to establish
| Question | What you provide |
|---|---|
| Does the asset exist? | The addresses holding it, and a record of the balance on the public ledger at the reporting date |
| Do we control it? | Proof of control, such as a signed message from the address or a documented test transaction |
| Is it ours? | Purchase records, and custody agreements if a third party holds it |
| How is it valued? | The accounting policy, the source of prices and the time of day used |
| Is it presented correctly? | Classification, measurement and disclosure under the standards that apply to you |
| Are the controls sound? | Approval rules, segregation of duties and key-management procedures |
The accounting framework, in brief
Rules depend on where you report and which standards you use. In the United States, the 2023 standard (ASU 2023-08) allows qualifying crypto assets to be measured at fair value, with changes in earnings, for fiscal years beginning after December 15, 2024. Under IFRS, companies have generally applied the intangible assets standard (IAS 38), or the inventories standard (IAS 2) where the asset is held for sale in the ordinary course of business. Local standards in your country may differ. Confirm your treatment with your auditors before you buy.
Build the evidence pack
- Write the accounting policy before the first purchase: classification, valuation source, treatment of costs, disposals.
- Keep a register of every address, wallet and key-holder, with dates and approvals.
- Record every transaction with date, amount, counterparty, price, fees and the approving person.
- Prepare a year-end statement showing the balance by address, valued at the policy price.
- Brief the auditor early, ideally before the first purchase, and agree the evidence they will rely on.
- If a custodian holds the asset, request their control report and confirmation procedures.
Tax and disclosure
Tax treatment differs by country and by how the asset is used. Take advice before you transact, and record the facts your adviser will need: dates, prices, purpose and holding period. Disclosure in the financial statements should describe the nature of the holding, how it is valued and the related risks.
Common mistakes
- Starting the audit conversation after the asset has been bought.
- Holding on an exchange account with no independent proof of control.
- Using different price sources in different months.
- No record of who approved what.
Checklist
- Accounting policy agreed with auditors
- Address and key-holder register in place
- Transaction log with approvals
- Year-end balance and valuation statement template
- Custodian reports requested, if relevant
- Tax adviser briefed
