AICPA updates digital assets guidance

The American Institute of CPAs issued an updated practice aid Thursday on digital assets such as cryptocurrency, providing new information on auditing the valuation of such assets and audit procedures surrounding their existence, rights and obligations.

The free practice aid, Accounting for and Auditing of Digital Assets, offers nonauthoritative guidance on how to account for and audit digital assets under U.S. GAAP for nongovernmental entities and generally accepted auditing standards, respectively. 

One of the updates is in Chapter 5, which now discusses considerations for auditing the existence, rights and obligations of digital assets. Chapter 6 explains various considerations for auditing the valuation of digital assets. An updated appendix B includes an auditing Q&A specific to the Securities and Exchange Commission's Staff Accounting Bulletin No. 121 (SAB No. 121), which expresses the staff's views on how an entity that has an obligation to safeguard digital assets for another party should account for that obligation.  This new Q&A adds to the already existing accounting Q&As for SAB No. 121. Congress recently passed a bill that would repeal the SAB 121, but President Biden vetoed the bill.

"This updated content adds valuable auditing guidance on testing assertions in these two key areas," said Ami Beers, senior director of assurance and advisory innovation for AICPA & CIMA, in a statement. "While the previous content helped practitioners with the client acceptance and planning and risk assessment phases of an engagement, this new content focuses on guidance for topics such as the different approaches to accessing information from a blockchain, assessing the reliability of that information, and suggested procedures an auditor may consider when an entity measures its digital assets using prices in active or thinly traded markets."

In addition to the new material, the practice aid has changed from a narrative structure to a Q&A format to offer more focused guidance on key topics. The entire practice aid has also been updated to align with two Statements on Auditing Standards that recently became effective, SAS No. 143 and SAS No. 145.

CPA business exec outlook

Separately on Thursday, the AICPA & CIMA released their quarterly Economic Outlook Survey for the second quarter, which polls CEOs, CFOs, controllers and other CPAs in U.S. companies who hold executive and senior management accounting roles. Around 35% of the CPA business executives surveyed said they were optimistic about the economy's prospects over the next 12 months, down from 43% in the first quarter. 

"There are conflicting signals in our latest results," said Tom Hood, AICPA & CIMA's executive vice president for business engagement and growth, in a statement. "On the one hand, inflation worries are about where they were a year ago, but over the course of the past year we saw a dip and then a steady rise in concern. So, there's a perception of worsening conditions. On the other hand, revenue and profit expectations have been ticking up in recent quarters, which signals underlying strength in the economy. Our observation is the mix of confusing or conflicting stats is causing this ongoing sideways movement across these indicators."

CPA business executives' top three concerns were inflation, employee and benefit costs, and availability of skilled personnel, the same as the first quarter, but "domestic political leadership' moved up three spots to No. 4 on the list in Q2.

The hiring outlook shows some signs of softening. About 29% of the CPA business executives polled said they have too few employees, with 16% saying they were looking to hire immediately and 13% saying they were hesitant to recruit due to uncertainty. That's a shift from last quarter when 37% of respondents said they had too few employees, and 22% said they were looking to hire immediately.

Profit expectations for the next 12 months are now +1.5%, up slightly from the previous quarter, while revenue growth is expected to be 2.9%, more than double what it was projected a year ago. CPA business executives' optimism about their own organizations' prospects over the next 12 months slipped from 49% to 48%, quarter over quarter. Some 54% of the CPA business executives polled said their companies plan to expand over the next 12 months, up from 51% in Q1.