International Journal of Accounting, Finance and Risk Management

Research Article | | Peer-Reviewed |

Financial Reporting and Accounting Treatment of Crypto Assets: Professional Accountants Perspectives

Received: 27 October 2023    Accepted: 11 December 2023    Published: 18 January 2024
Views:       Downloads:

Share This Article

Abstract

Crypto asset is a broad term covering all assets stored on distributed ledgers using block chain technology. Crypto assets are used to undertake commercial transactions and serve as investment options globally; yet there are no specific accounting standards that guide how crypto assets should be recorded in financial statements. There are few studies that address the issue of accounting treatment of crypto assets. The lack of literature has resulted in the need to investigate the views of professional accountants on how crypto assets should be reflected in financial statements. The research relied on primary data and adopted an expert sampling technique which is a form of judgmental sampling technique. The data was collected using questionnaire surveys to get the views of sixty-four professional accountants in Nigeria. The study attempts to contribute to the existing literature on crypto assets by providing a practical insight into the accounting treatment of crypto assets. The compliance of crypto assets having the features of assets in accounting was established by this study. According to the respondents’ crypto assets can be classified in various forms of assets like intangible assets, cash and cash equivalent, inventory, and financial instrument. Also, crypto assets can be classified as short-term assets or long-term assets. This is because of the accounting concept of substance over form that requires that the economic substance of transactions and events are decisive for the recognition and measurement of transactions in financial statements. The study concluded that crypto assets have an impact on financial statements of entities that hold the assets. The study recommends that there is need for standalone standards specifically for crypto assets to avoid the discretionary judgment current relied upon. There is also the need for the regulation of crypto assets in general.

DOI 10.11648/j.ijafrm.20240901.11
Published in International Journal of Accounting, Finance and Risk Management (Volume 9, Issue 1, April 2024)
Page(s) 1-11
Creative Commons

This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.

Copyright

Copyright © The Author(s), 2024. Published by Science Publishing Group

Keywords

Crypto Assets, Financial Reporting, Accounting Treatment, Professional Accountants

References
[1] Andrianto, Y., &Diputra, Y. (2017). The effect of cryptocurrency on investment portfolio effectiveness. Journal of finance and accounting, 5(6), 229-238.
[2] Bharti, P. (2023). The Accounting Of Cryptocurrency As Per Indian Accounting Standards: A Review Paper. Journal of Pharmaceutical Negative Results, 413-416.
[3] Blahusiakova, M. (2022). Accounting for Holdings of Cryptocurrencies in the Slovak Republic: Comparative Analysis. Contemporary Economics, 16(1), 16-32.
[4] Brouard, F., Bujaki, M., Durocher, S., & Neilson, L. C. (2017). Professional accountants’ identity formation: An integrative framework. Journal of Business Ethics, 142, 225-238.
[5] Brukhanskyi and I. Spilnyk, "Cryptographic Objects in the Accounting System," 2019 9th International Conference on Advanced Computer Information Technologies (ACIT), Ceske Budejovice, Czech Republic, 2019, pp. 384-387.
[6] Brukhanskyi, R. F., & Spilnyk, I. V. (2019). Crypto assets in the system of accounting and reporting. The Problems of Economy, 2, 145-156.
[7] Chou, J. H., Agrawal, P., & Birt, J. (2022). Accounting for crypto-assets: stakeholders’ perceptions. Studies in Economics and Finance.
[8] Chulpanovna, K. Z., Botiraliyevna, Y. M., & Turgunovich, M. A. (2021). Society interests, professional competence and ethical requirements for professional accountants. World Economics and Finance Bulletin, 4, 3-5.
[9] Hubbard, B. (2023). Decrypting crypto: implications of potential financial accounting treatments of cryptocurrency. Accounting Research Journal.
[10] Ibrahim, M., Waziria, B. Z., & Auwal, B. A. M. (2021). Accounting for Crypto Assets and its Implication for Financial Reporting. In 3rd ICAN Malaysia International Conference on Accounting and Finance (p. 29).
[11] Kasomo, D. (2006). Research Methods in Humanities (1st ed.). Egerton University Press Publishers.
[12] Küçükgergerli, N., & Atılgan Sarıdoğan, A. (2022). Development and accounting of cryptocurrencies. Current financial studies volume I.
[13] Liu, Y., and A. Tsyvinski. 2020. Risks and returns of cryptocurrency. The Review of Financial Studies 34(6): 2689–2727.
[14] Luo, M., & Yu, S. (2022). Financial reporting for cryptocurrency. Review of Accounting Studies, 1-34.
[15] Makarov, I., and A. Schoar. 2020. Trading and arbitrage in cryptocurrency markets. Journal of Financial Economics 135(2): 293–319.
[16] Mbobo, M. E., & Ekpo, N. B. (2016). Operationalising the qualitative characteristics of financial reporting. International Journal of Finance and Accounting, 5(4), 184-192.
[17] Morozova, T., Akhmadeev, R., Lehoux, L., Yumashev, A. V., Meshkova, G. V., & Lukiyanova, M. (Morozova, Crypto asset assessment models in financial reporting content typologies. Entrepreneurship and Sustainability Issues, 7(3), 2196.
[18] Procházka, D. (2018). Accounting for bitcoin and other cryptocurrencies under IFRS: A comparison and assessment of competing models. The International Journal of Digital Accounting Research, 18(24), 161-188.
[19] PwC. 2021. Crypto asset guide. https://viewpoint.pwc.com/dt/us/en/pwc/accounting_guides/crypto-assets-guide/crypto_assets_guide/ca_pdf.html. Accessed 1 December, 2022.
[20] Ramassa, Paola, and Giulia Leoni. "Standard setting in times of technological change: accounting for cryptocurrency holdings." Accounting, Auditing & Accountability Journal (2021).
[21] Ramrakhiani, N. (2018). An introductory outlook: what are the prospective and current issues with regards to accounting for cryptocurrency? (Doctoral dissertation, Dublin Business School.
[22] Rejeb, A., Rejeb, K., & Keogh, J. G. (2021). Cryptocurrencies in Modern Finance: A Literature Review. Etikonomi, 20(1), 93-118.
[23] Ryabova, T. S., & Henderson, S. (2019). Integrating cryptocurrency into intermediate financial accounting curriculum: a case study. Journal of Accounting and Finance, 19(6), 167-179.
[24] Sixt, E., &Himmer, K. (2019). Accounting and Taxation of Cryptoassets.
[25] Sundqvist, E., &Hyytiä, P. (2019). Accounting for Cryptocurrencies-A Nightmare for Accountants.
[26] Tarasova, T., Usatenko, O., Makurin, A., Ivanenko, V., & Cherchata, A. (2020). Accounting and features of mathematical modeling of the system to forecast cryptocurrency exchange rate. Accounting, 6(3), 357-364.
[27] Vincent, N. E., & Wilkins, A. M. (2020). Challenges when auditing cryptocurrencies. Current Issues in Auditing, 14(1), A46-A58.
[28] Yatsyk, T. V. (2018). Methodology of financial accounting of cryptocurrencies according to the IFRS. European Journal of Economics and Management, 4(6), 53-60.
[29] Yu, T., Z. Lin, and Q. Tang. 2019. Blockchain: Introduction and application in financial accounting. The Journal of Corporate Accounting & Finance 29(4): 37.
[30] Zafar, M. B., Bhattacharya, P., Ganguly, N., Gummadi, K. P., & Ghosh, S. (2015). Sampling content from online social networks: Comparing random vs. expert sampling of the twitter stream. ACM Transactions on the Web (TWEB), 9(3), 1-33.
Cite This Article
  • APA Style

    Akanbi, A. (2024). Financial Reporting and Accounting Treatment of Crypto Assets: Professional Accountants Perspectives. International Journal of Accounting, Finance and Risk Management, 9(1), 1-11. https://doi.org/10.11648/j.ijafrm.20240901.11

    Copy | Download

    ACS Style

    Akanbi, A. Financial Reporting and Accounting Treatment of Crypto Assets: Professional Accountants Perspectives. Int. J. Account. Finance Risk Manag. 2024, 9(1), 1-11. doi: 10.11648/j.ijafrm.20240901.11

    Copy | Download

    AMA Style

    Akanbi A. Financial Reporting and Accounting Treatment of Crypto Assets: Professional Accountants Perspectives. Int J Account Finance Risk Manag. 2024;9(1):1-11. doi: 10.11648/j.ijafrm.20240901.11

    Copy | Download

  • @article{10.11648/j.ijafrm.20240901.11,
      author = {Abiodun Akanbi},
      title = {Financial Reporting and Accounting Treatment of Crypto Assets: Professional Accountants Perspectives},
      journal = {International Journal of Accounting, Finance and Risk Management},
      volume = {9},
      number = {1},
      pages = {1-11},
      doi = {10.11648/j.ijafrm.20240901.11},
      url = {https://doi.org/10.11648/j.ijafrm.20240901.11},
      eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijafrm.20240901.11},
      abstract = {Crypto asset is a broad term covering all assets stored on distributed ledgers using block chain technology. Crypto assets are used to undertake commercial transactions and serve as investment options globally; yet there are no specific accounting standards that guide how crypto assets should be recorded in financial statements. There are few studies that address the issue of accounting treatment of crypto assets. The lack of literature has resulted in the need to investigate the views of professional accountants on how crypto assets should be reflected in financial statements. The research relied on primary data and adopted an expert sampling technique which is a form of judgmental sampling technique. The data was collected using questionnaire surveys to get the views of sixty-four professional accountants in Nigeria. The study attempts to contribute to the existing literature on crypto assets by providing a practical insight into the accounting treatment of crypto assets. The compliance of crypto assets having the features of assets in accounting was established by this study. According to the respondents’ crypto assets can be classified in various forms of assets like intangible assets, cash and cash equivalent, inventory, and financial instrument. Also, crypto assets can be classified as short-term assets or long-term assets. This is because of the accounting concept of substance over form that requires that the economic substance of transactions and events are decisive for the recognition and measurement of transactions in financial statements. The study concluded that crypto assets have an impact on financial statements of entities that hold the assets. The study recommends that there is need for standalone standards specifically for crypto assets to avoid the discretionary judgment current relied upon. There is also the need for the regulation of crypto assets in general.
    },
     year = {2024}
    }
    

    Copy | Download

  • TY  - JOUR
    T1  - Financial Reporting and Accounting Treatment of Crypto Assets: Professional Accountants Perspectives
    AU  - Abiodun Akanbi
    Y1  - 2024/01/18
    PY  - 2024
    N1  - https://doi.org/10.11648/j.ijafrm.20240901.11
    DO  - 10.11648/j.ijafrm.20240901.11
    T2  - International Journal of Accounting, Finance and Risk Management
    JF  - International Journal of Accounting, Finance and Risk Management
    JO  - International Journal of Accounting, Finance and Risk Management
    SP  - 1
    EP  - 11
    PB  - Science Publishing Group
    SN  - 2578-9376
    UR  - https://doi.org/10.11648/j.ijafrm.20240901.11
    AB  - Crypto asset is a broad term covering all assets stored on distributed ledgers using block chain technology. Crypto assets are used to undertake commercial transactions and serve as investment options globally; yet there are no specific accounting standards that guide how crypto assets should be recorded in financial statements. There are few studies that address the issue of accounting treatment of crypto assets. The lack of literature has resulted in the need to investigate the views of professional accountants on how crypto assets should be reflected in financial statements. The research relied on primary data and adopted an expert sampling technique which is a form of judgmental sampling technique. The data was collected using questionnaire surveys to get the views of sixty-four professional accountants in Nigeria. The study attempts to contribute to the existing literature on crypto assets by providing a practical insight into the accounting treatment of crypto assets. The compliance of crypto assets having the features of assets in accounting was established by this study. According to the respondents’ crypto assets can be classified in various forms of assets like intangible assets, cash and cash equivalent, inventory, and financial instrument. Also, crypto assets can be classified as short-term assets or long-term assets. This is because of the accounting concept of substance over form that requires that the economic substance of transactions and events are decisive for the recognition and measurement of transactions in financial statements. The study concluded that crypto assets have an impact on financial statements of entities that hold the assets. The study recommends that there is need for standalone standards specifically for crypto assets to avoid the discretionary judgment current relied upon. There is also the need for the regulation of crypto assets in general.
    
    VL  - 9
    IS  - 1
    ER  - 

    Copy | Download

Author Information
  • Department of Business Administration, Nile University of Nigeria, Abuja, Nigeria

  • Sections