As more entities transact with digital assets, there is increased demand for accounting and finance professionals who can apply their expertise to, account for, and audit these assets.
“Whether you are accounting for digital assets or auditing entities who are operating in this space, in order to understand the asset class, you need to understand the fundamentals of the underlying technology,” said Diana Krupica, CPA, Senior Manager, Emerging Assurance Technologies, at AICPA & CIMA.
Due diligence key to be successful
Blockchain is the technology that enables digital assets.
Although there are many different types of digital assets, you might be more familiar with Bitcoin (medium of exchange), stablecoins, or even nonfungible tokens (NFTs). Although accounting and auditing in the digital assets space has its own unique aspects, there are some similarities with traditional financial assets which can be applied to this new asset class.
“[Professionals] have the skills, they just need to get that specific subject matter knowledge,” said Ami Beers, CPA, CGMA, Senior Director, Assurance and Advisory Innovation at AICPA & CIMA. One pathway to get that knowledge is through the Blockchain and Digital Assets Fundamentals Certificate from AICPA & CIMA.
As with any assets there are risks, and in the case of digital assets, these may be volatile in their value or the risk of loss. These risks need to be understood to reduce the possibilities of financial losses.
Often, third-party service providers are involved because they are used to help entities transact in or hold digital assets. Practicing due diligence — thoroughly researching those third parties — is one of the keys for risk management in this area.
“Any time you engage with a third party in the digital asset space, whether they are used to help you transact with or hold your digital assets, you manage risk by performing due diligence to gain an understanding of that third party. This includes whether they have a SOC1 or SOC 2 report on controls,” said Krupica.
But there may be some benefits to investing in and working with digital assets.
Blockchain affords more control over transactions, and by the nature of the technology, transactions happen quickly and efficiently — minutes rather than days. Decentralization may also be a benefit — digital asset owners can connect directly with each other removing the need for a centralized institution. Investing and trading may be more accessible than with traditional fiat currencies because the markets are continuous and never close. And investors appreciate the incredibly secure nature of blockchains.
Leverage financial expertise on digital assets
Blockchain and digital assets have found permanence among fiat currencies and other valuable assets — their inherent volatility can’t sway investors. But the understanding of blockchain technology or accounting for and auditing of digital assets requires adept, trusted professionals who can use their expertise in financial matters to their advantage.
The Blockchain and Digital Assets Fundamentals Certificate provides the foundational concepts you need to work in this digital space. You’ll gain an understanding of the core components of blockchain infrastructure, and the transaction lifecycle. Additionally, you’ll learn the fundamental characteristics of digital assets and their applications to finance and accounting.
“Blockchain technology and digital assets have been around for several years,” said Beers. Accounting and finance professionals need to make up that ground and catch up. “Whether you’re an accountant in a company investing in these assets, or you’re an auditor who has clients who are getting involved in this space … not only do you have to have an understanding of the blockchain technology but also what it means and how it’s impacting the books and records of your company.”
“There are thousands of digital assets out there,” said Krupica. “[Individuals] can’t just dive in without researching thoroughly. It’s really the key to protecting your entity from potential risks that come with this asset class.”
Gain an edge by expanding your knowledge on blockchain and digital assets with additional guidance, resources, toolkits, and more from AICPA & CIMA. by expanding your knowledge on blockchain and digital assets with additional guidance, resources, toolkits, and more from AICPA & CIMA.