Auditing in the crypto-asset sector

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Nov 07, 2019

On November 7, 2019, the Canadian Public Accountability Board (CPAB) released its 2019 inspections insights on auditing in the crypto-asset sector. There are currently 48 Canadian reporting issuers with activities in the crypto-asset sector. Those activities include a variety of crypto-asset trading strategies and crypto-asset mining.

They found significant findings (deficiencies in the application of generally accepted auditing standards that could result in a restatement of the company’s financials) in seven of eight audit files inspected to date. Remediation remains in progress for some of those audits.

The five most common deficiencies include:

  1. Auditors did not have an adequate understanding of audit risks when they designed their audit approaches.
  2. Auditors relied on information obtained from crypto-exchanges and custodians without evaluating the reliability of that information.
  3. For entities that hold self-custodied crypto-assets, auditors did not obtain sufficient evidence to support the entities’ ownership claims to those assets.
  4. Auditors did not evaluate the reliability of information obtained from blockchains.
  5. For entities engaged in crypto-asset mining activities, auditors that limited their audit work to vouching crypto-assets received to the blockchain did not obtain sufficient audit evidence.

Review the publication on the CPAB's website.

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