Cryptocurrency audit

Indeed, while the IFRS due process provides opportunities for everyone's participation, it mainly sees the participation of well-resourced national standard-setters, major international companies, international accounting firms and educational institutions Wingard et al. In such a scenario, the IASB is devoting increasing efforts to outreach and capture the views of other users — for instance by appointing board members with regulatory and academic background — and to maintain a sufficient technical rigour by achieving a balance among different interest groups Bhimani et al.

Their study is of particular interest given the relevance of agenda formation for standard setting Fogarty, and the scant literature investigating this initial phase Young, Their comprehensive analysis shows that the IASB constructed legitimacy by soliciting views from its target groups i.

While these developments resonate with the expectations of constituents, the divergent views from the growing number of consultations could also lead to more discretion exercised by the IASB itself and an inner circle of constituents. Indeed, loyal contributors are likely to remain dominant if consultation increases, while new and diverse constituents may find it difficult to identify the relevant project to contribute to.

The IASB's search for legitimacy emerges also in the IFRS interpretation process, which is part of the maintenance phase of standard setting and was openly criticised over the years about its ability to produce interpretations. The activity of the first interpretative bodies i. SIC and IFRIC faced legitimacy issues due to the considerable absence of corporate involvement Larson, , which remained substantially low even after an increase in constituents' participation Larson, Recent evidence confirms that agenda decisions are by far the most frequent output of the IFRS IC activity, showing that they increasingly include explanatory material to support standard application Ramassa and Quagli, This change suggests growing attention to cope with constituents' needs as well as to enhance legitimacy in the interpretation domain.

These analyses provide insights into the actions and behaviours of the Board and staff members, shedding light on the IASB as a social entity and the influence of its organisational character on the outcomes of its projects. Overall, the literature on IFRS standard setting depicts an evolving scenario characterised by relevant efforts of the IASB to meet constituents' demand for accountability, thereby legitimising its complex role as private global standard setter. However, evidence also suggests that the formal respect of the full and fair consultation principle does not necessarily lead to substantial effects in terms of standard setting decisions, while inevitably lengthening the standard-setting process.

Our paper contributes to the literature on this under-researched area by exploring how the IASB has dealt with the emerging issue of accounting for cryptocurrencies, with a particular focus on constituents' expectations and the motivations underlying its regulatory response.

Our analysis aims at interpreting how the IASB has dealt with the emerging issue of accounting for cryptocurrencies by responding to the following research questions: What are the regulatory approach adopted by the IASB to deal with the emerging issue of accounting for cryptocurrency and its underlying motivations? To answer these questions, we investigate the path that led the IASB to issue an agenda decision, its motivations and the IFRS constituents' expectations by mobilising the regulatory space as a method theory Lukka and Vinnari, Hence, in our study, the regulatory space plays the role of a meta-level conceptual system, which originates from another field e.

In doing so, we consider that the formation of theories can occur at various levels through the theorisation of metaphors, differentiation, or concepts Llewellyn, and use the theoretical concept of regulatory space to offer an alternative perspective and gain new insights into accounting standard setting Lukka and Vinnari, Accounting studies have fruitfully used this theoretical lens, which is particularly pertinent to our analysis since accounting standard setting is a political process, and as such, it involves the contest for power between actors in a notional regulatory space that is available for occupation.

Regulatory spaces are contested arenas and their occupants are continually involved in quests to mark the field with their own imprimatur Malsch and Gendron, The shape of the space and the distribution of power between the actors can be better understood by looking at how organisations enter the regulatory space and defend their position within it Hancher and Moran, In doing so, organisations can adopt strategic responses Oliver, , which can alter over time in response to, or in anticipation of, the strategic actions of the other actors Canning and O'Dwyer, Regulators largely adopt compromise or acquiescence strategies in case of aggressive regulatees' resistance Shapiro and Matson, but can also enrol defiance strategies to repel such resistance Canning and O'Dwyer, In such a dynamic arena, the contest for power is a key element Hancher and Moran, and its analysis requires particular attention to 1 the actors involved in open conflicts; 2 the issues they mobilise and those they avoid; and 3 the discursive context Malsch and Gendron, Against such a contested background, the shape and outputs of the regulatory space are influenced by five dimensions and their interactions: 1 the national peculiarities in terms of legal and political culture; 2 the historical moment; 3 the dominant organisational forms in the regulatory arena; 4 inter-organisational linkages; and 5 the nature of the issues which are negotiated Hancher and Moran, ; Gatti and Poli, In our study, the peculiarities of the legal and political cultures are a relevant factor for the IASB as a private global standard setter that is confronted with demands from various constituents and jurisdictions.

Additionally, the nature of the issue negotiated i. The theoretical lens of regulatory space has also been applied to explore the standard setter's agenda formation, which is particularly relevant for our study Young, In other words, accounting problems do not arise naturally but need to be constructed as problems by the members of the regulatory space.

In such a perspective, agenda formation is a key part of the process of accounting change, which requires that 1 accounting issues are constructed as accounting problems, 2 accounting problems are constructed as appropriate for standard setting and 3 solutions are constructed as appropriate resolutions to the specific accounting problem.

The agenda formation generates competition between rival regulators for the control of the regulatory space Walker and Robinson, Both individuals, such as standard board members and technical staff and political institutions are found to exert a considerable influence on the agenda formation Howieson, , consistent with the idea that people, organisations and events that act upon accounting and accounting practices construct the regulatory space Young, In such a perspective, an understanding of accounting standard setting cannot be isolated from the analysis of the accounting claims and expectations of constituents about standard setters' responses, that construct a regulatory space for an accounting change.

Additionally, regulators set their agenda interpreting the expectations about their role and purpose rather than simply responding to pressures from other actors in the space. In this regulatory arena, the desire of standard setters to construct or maintain legitimacy Artiach et al. However, the output of the regulatory space depends on several factors, including how the dialogue between the space occupants unfolds.

Constructing accounting issues as accounting problems is not enough to obtain the desired standard setter response, as accounting problems must also be constructed as appropriate for standard-setting activity through accounting claims e. Young, Drawing on this theoretical approach, we examine the debate between the IFRS bodies and their constituents to reveal the construction of the accounting problem by the occupants of regulatory space and to discuss the final decision of the IASB with respect to its constituents' expectations.

To achieve its aims, the investigation makes use of an extensive thematic analysis performed on public written documents, meetings audio-recordings and 23 comment letters regarding the discussion on accounting for cryptocurrency holdings within the IASB, its various bodies and its constituents. The documents and recordings are gathered from the IASB official website www. Finally, the 23 comment letters in response to the tentative agenda decision, as sent by various constituents Table 2 , were also included in the analysis.

Thematic analysis is the analytical approach chosen to explore the various written documents, letters and transcribed meetings recordings as it provides a means to closely inspect texts to highlight recurrent themes pertinent to the phenomenon under study Bowen, ; Boyatzis, ; Fereday and Muir-Cochrane, To such end, the analytical approach entails the coding of the texts to label recurring themes and highlight their relationships. An initial list of coding based on theory-derived categories can be prepared before approaching the texts.

As a result, the texts were coded to identify emerging themes that can be related to the issue of accounting for cryptocurrency, its translation or not into an accounting problem and the solution offered by the IASB to respond to its constituents' expectations. The coding has focused on cryptocurrency, rather than crypto-assets, being the former the object of the debate within the IASB and its constituents. Indeed, the accounting for crypto-assets pertains to a more recent — and still open — debate among accounting academics and practitioners see EFRAG Discussion paper, , it also involves the consideration of crypto-liabilities and entails different entries and valuation practices.

Codes emerged from the initial reading of the entire set of documents and focussed on identifying and categorising key themes emerging from the debate within IASB, IFRS IC and constituents regarding the construction of the cryptocurrency accounting problem and the IASB response to constituents' expectations. Whenever new codes suggested new themes during the analytical process, all previously scrutinised sources were re-assessed Bowen, The two authors performed the coding process separately and subsequently compared their theme lists to identify common themes, discuss differences and reach a consensus on the main themes Parker and Roffey, The discussion and comparison of themes have demonstrated that the coding process culminated in a saturation point, where more and new data did not provide new information but ensured replication of identified themes Bowen, The analysis of the development of the IFRS cryptocurrency project, from the initial demand for standard setting to the finalisation of the IFRS IC agenda decision, has shed light on the IASB's response to the accounting problem of cryptocurrency holdings constructed by constituents.

The analysis has identified two different phases. The first phase entailed raising the issue and constructing the accounting problem, from the first discussion on cryptocurrency between the IASB and its constituents up to the decision of the IASB to ask the IFRS IC for an agenda decision on the matter. The second phase covers the solution offered by the IASB to respond to its constituents' expectations, encompassing the issuance of the tentative agenda decision by the IFRS IC, the consultation period and the finalisation of the agenda decision.

Accounting for cryptocurrency holdings under IFRS has been the topic of several discussions and consultations between IFRS bodies and constituents in the last few years Table 3. In these consultations, national standard setters construct the accounting issue of cryptocurrency holdings as an accounting problem, progressively forming an expectation of specific IFRS requirements for this emerging and peculiar class of assets.

In April , the IASB discussed the possibility to add a cryptocurrency project to its agenda and asked constituents to provide insights on accounting-related issues of cryptocurrency holdings. This way, the Board gathered the main items in need of research, which is usually the first stage of standard setting. Most of the ASAF members agreed that a standard-setting project was inappropriate due to cryptocurrency being in its infancy but asked the Board to keep monitoring the phenomenon.

The discussion re-opened in January due to some developments in the Bitcoin market and new regulatory activities by national standard setters. Indeed, the Japanese standard setter had issued an exposure draft on accounting for cryptocurrencies and the US FASB had undertaken research on the topic.

The ASAF meeting of April discussed the insights from national standard setters about their guidance on cryptocurrency holdings. A similar approach was adopted by the Korean Accounting Standards Board. However, the diffusion of digital currencies among ASAF members' jurisdictions was mixed, with larger holdings in Canada than in Asia, Oceania and France. France, in particular, asked the IASB for some immediate guidelines based on existing requirements but with a project for a new standard in the long term.

By checking existing accounting standards for a solution, the Board aimed at verifying whether accounting for cryptocurrencies was an accounting problem appropriate for standard setting, thus deserving specific IFRS requirements. Indeed, the indication of an accounting problem is not sufficient to add such item to the standard setters' agenda, rather the problem must be found appropriate for standard setting Young, The IFRS IC in September concluded that cryptocurrency holdings are not financial assets under the existing IFRS 9, nor equity instruments, as they do not give rise to a contractual right for the holder and they are not a contract that will or may be settled in the holder's own equity instruments.

Accordingly, the applicable standard for cryptocurrency holdings was indicated in IAS 2 Inventories if they are held for sale in the ordinary course of business, and in IAS 38 Intangible Assets in all the other cases [9]. Such a decision was the outcome of a fierce debate within the Board, in which the Chair had to use his casting vote to get it approved with a simple majority eight out of fourteen Board members.

Thus, the Board tentatively concluded that the cryptocurrency issue was not an appropriate accounting problem for new standard setting, deciding to take a position and address it by resorting to existing IFRS requirements.

In the tentative agenda, the IFRS IC describes the cryptocurrencies as assets that meet the definition of assets from existing IFRS, in contrast with the prevalent position in the accounting literature that cryptocurrency is a new class of assets Ram, However, this view is in line with the Board's intent to maintain the reporting of cryptocurrency holdings under the existing IFRS and contain their specific features within the scope of its standards, even if they were developed before this type of assets even existed.

As required by the due process, the tentative agenda decision was open for comments during a day consultation period, in line with the principle of full and fair consultation. The analysis of the 23 comment letters CL [10] in response to the IFRS IC's tentative agenda decision provides evidence on the reactions of several classes of constituents to the approach of the IASB to the accounting for cryptocurrency holdings. The participation in the public consultation Table 2 highlights a significant interest by national standard setters 9 CL , followed by securities commissions 3 CL , professional associations 3 CL , and accounting firms 3 CL.

Such responses reflect the traditionally modest participation of preparers and users in IFRS consultations Durocher et al. Indeed, only two comment letters conveyed the views of companies and professionals directly involved in the crytpocurrency industry: the Chamber of Digital Commerce and Brane Inc. However, these constituents tend to be represented by their national jurisdictions or by professional associations, as it happens in the case of the Chamber of Digital Commerce, which is the world's leading trade association representing more than organisations in the digital asset and blockchain industry.

Most respondents consider the technical analysis of the IFRS IC formally correct, but they also raise major concerns about the content of the agenda decision, mainly due to its reporting outcomes. A clear example of this position is expressed in the CL from the Japanese standard setter: We agree with the interpretation provided in the tentative agenda decision regarding the application of existing IFRS Standards.

However, we believe that the application of existing IFRS Standards, as stated, may result in inappropriate outcomes which do not provide the most relevant information, from the viewpoint of relevant financial reporting. Accordingly, considering the social impact of cryptocurrencies and the priority within the IASB's standard-setting projects, we believe that IFRS Standards need to be amended in a timely manner. CL 1, p. We share these concerns. CL 2, p. While it is not always clear whether these letters were in full disagreement with the agenda decision, the IFRS IC analysis on the letters states that seven respondents gave a positive opinion both on the technical analysis and the choice of finalising the agenda decision.

However, some of those letters show substantial criticism to the soundness of the agenda decision. For instance, one of those states: Whilst we can understand where the IFRS IC landed and why and how it landed there, we feel uncomfortable with the robustness and the relevance of that agenda decision. This all seems to suggest that the subject is sitting better with the Board who can apply a fresh look into this CL 13, p.

Only four letters CL 8, CL 10, CL 12 and CL 15 out of the 23 explicitly express a full agreement with the agenda decision without advancing any proposals for the future. Indeed, the letters underline that IAS 38 fails in fairly representing cryptocurrencies as it does not to allow FVTPL measurement, which instead is depicted as the most informative approach. As a consequence, respondents suggest alternative solutions such as new standard setting 10 constituents or other less radical and time consuming options.

These alternatives include narrow-scope amendments of existing IFRS, such as removal of cryptocurrency holdings from the scope of IAS 38 due to cryptocurrencies being a new kind of asset four constituents , as shown in the following example: In relation to content, we understand that the TAD [tentative agenda decision] portraits a narrow and ultra-positivistic interpretation of IAS 38 by focusing only on the definitional elements of IAS 38 identifiable, non-monetary and without physical substance and disregarding its initial purpose when determining its applicability to cryptocurrencies teleological approach.

CL 16, pp. Some respondents explicitly acknowledge the need for time to monitor the evolution of cryptocurrencies by suggesting alternative solutions for the short term, in view of a wider standard-setting project in the long term. They urge the IFRS IC to take into consideration the distinctive features of cryptocurrencies and to provide guidance paying attention to the economic substance of operations rather than to how they fit into standards developed for other classes of assets. Overall, most respondents seem to share the view that accounting for cryptocurrency holdings is not properly addressed by this agenda decision, even if they have different positions about the appropriateness of this intermediate solution and other alternatives looking forward to a more long-term project.

The need for monitoring cryptocurrency evolution to develop a better understanding of this multifaceted phenomenon emerges in many CL, especially in consideration of the future decisions on the matter by central banks and fiscal authorities CL 13 , as well as the constant change of cryptocurrencies features, that may affect their nature as assets CL 10, CL The variety of options proposed by respondents show that the IASB could address the issue in the short term — without a new standard — using different approaches, by intervening on existing IFRS e.

At that meeting, several members of the IFRS IC stressed that this choice followed the IASB's decision not to add a standard-setting project to its agenda and that it addressed the need to pursue comparability in a non-regulated area. This point is in line with a strict interpretation of the scope of the IFRS IC's activity in issuing an agenda decision, limited to the correctness of how existing IFRS must be applied in the case under consideration.

This is not the outcome of standard-setting activity in a strict sense but constitutes guidance to apply existing IFRS to account for a new and rapidly evolving class of assets. Additionally, the revised Due Process Handbook has later specified that entities are required to apply agenda decisions as they derive their authority from the standards themselves IFRS Foundation, , par. The analysis of the debate on accounting for cryptocurrencies within the IASB has shed light on how the IASB has dealt with this emerging issue, by identifying its constituents' expectations and the limits of its regulatory response.

The theoretical lens of regulatory space is used to interpret the path that led to the agenda decision by the IFRS IC. The first phase of the analysis shows how the constituents provide their views and expectations in an effort to raise the accounting issue of cryptocurrency holdings within the regulatory space and to construct it as an accounting problem. Initial signs of an accounting issue appeared in the aftermath of the IASB Agenda consultation, when ASAF members responded to the IASB with mixed opinions on the topic, due to the rapid evolution of cryptocurrencies and the different diffusion of this phenomenon among jurisdictions.

As a result, some standard setters mainly from Asia and Australia started constructing the cryptocurrency accounting problem, by arguing that literally applying existing IFRS results in an inappropriate reporting outcome due to the lack of FVTPL as a measurement option. Facing the vacuum left by the IFRS on this specific accounting issue, national standard setters autonomously issued local recommendations and requirements as appropriate solutions for accounting for cryptocurrency holdings, thereby attempting to occupy a part of the regulatory space that was not yet occupied by the IASB Malsch and Gendron, In response to these various claims, and pressured by the national initiatives, the Board solicited the views of the constituents who had raised questions regarding a cryptocurrency project in the IASB meetings following the comments to the agenda consultation.

However, further pressures from other constituents exacerbated by the issuance of Japanese standards for accounting for digital currencies in March , led the IASB to seek the advice of the IFRS IC about the application of existing IFRS and whether it would provide useful information to investors for decision-making. Several Committee members also shared the national standard setters' criticism on the appropriateness of applying IAS 38 to cryptocurrency holding, as clearly shown in the following agenda paper: Several Committee members said that applying IAS 38 to holdings of cryptocurrencies would not provide useful information to users of financial statements.

Those Committee members expressed concerns about particular aspects of the measurement requirements of IAS 38 if applied to holdings of cryptocurrencies. While in the above comment the IASB recognised cryptocurrency holdings as an accounting issue, the criticism regarding the use of existing IFRS to address it paved the way for further quests in the regulatory space since the IASB did not offer a solution and further increased the uncertainty.

With this decision, the IASB provided a much-expected response that was aimed more at confirming its dominant role in the regulatory space, rather than addressing the several constituents' expectations. Indeed, the whole agenda decision path raised sound criticism, by both the various constituents' comments to the tentative agenda decision and several Board members themselves. With regards to constituents' disappointed expectations and criticism, a clear picture emerges from the public consultation on the tentative agenda decision, which includes explanatory material clarifying how to apply existing IFRS to cryptocurrency holdings.

The analysis of comment letters sheds light on constituents' expectations in terms of the form and the substance of an appropriate accounting solution, which might be different in the short and the long term.

In fact, many respondents acknowledged that developing an appropriate solution for a rapidly evolving phenomenon might require some time, which is also needed to take into adequate consideration the regulatory responses of supervisory authorities e. However, constituents expected a short-term solution from the IASB to ensure consistent and appropriate accounting for IFRS adopters holding cryptocurrencies, based on the idea that existing IFRS requirements did not result in relevant reporting outcomes.

The analysis of comment letters reveals the themes of responses to the IFRS IC tentative agenda decision and highlights some of the criticism to the suggested treatment as well as a clear expectation for standard setting by the IASB. In the comment letters, there is a general agreement to the technical analysis supporting IFRS IC's guidance about the cryptocurrency holdings been assets, but not financial assets.

This is in contrast with some accounting research that suggests that cryptocurrency is a new asset Ram, and might be a financial asset when held for investment Tan and Low, Some letters reveal criticism towards the use of IAS 38 for reporting the cryptocurrency holdings, thus criticising the solution of applying existing standards as not appropriate to the accounting problem raised during consultations. Such substantial disagreement is based on the accounting claims of relevance, usefulness and fair representation, which are claimed to be the tenets of the IASB's activity in developing high-quality global standards IFRS Foundation, , The forms suggested to the IASB to achieve the expected solution of a different accounting treatment i.

This variety shows that constituents' expectations were not confined to a new standard or IFRIC interpretation and also that the IASB had different available options to address this accounting issue in the short term. With regards to the criticism raised by some Board members, the audio recordings reveal that the IASB meeting on the agenda decision was tense because several members argued that existing IFRS were not the appropriate response to the cryptocurrency accounting problem.

These members based their opinions on the accounting claim of relevance, which was also present in the constituents' construction of the accounting problem. The disagreement within the Board is evident considering the approval of this resolution by a simple majority, which was achieved only by using the Chair's casting vote, an additional vote that the Chair exceptionally uses in the event of a tied vote IFRS Foundation, , para Further, the analysis of the tensions and claims along the four-year cryptocurrency debate provides insights into the motivations underlying the IASB regulatory response to the issue.

First, as gathered from the IASB meetings recording, the IASB regulatory response is motivated by cryptocurrency being a too complex and uncertain matter to undertake a time-consuming project immediately. Indeed, according to Mr.

Hoogervorst AICPA Conference, , by the time — usually five years — a new accounting standard is developed, cryptocurrencies will have disappeared, being just a passing trend. However, the initial choice of not addressing this issue exposed the IASB to the risk of leaving the regulatory space available to other members Canning and O'Dwyer, As a consequence, the agenda decision can be interpreted as a strategic response to maintain a dominant position in the regulatory space Oliver, ; Malsch and Gendron, , while also formally respond to constituents' expectations within a consultative environment.

The issuance of the agenda decision including explanatory material is compliant with the Due Process Handbook, as it satisfies the request for guidance, as manifested by IASB constituents. Indeed, by prioritising the agreement with the technical analysis over other more critical and substantial comments, the Board could formally state to have addressed the accounting problem, by preserving the inclusive participation and full and fair consultation, and in so doing, maintaining at least formally its legitimacy Artiach et al.

However, having demonstrated that the current accounting solution is deemed inappropriate by several Board members and constituents, we argue that there were other potential solutions — suggested by respondents — the IASB could have adopted and still avoid undertaking a long standard-setting project on such a complex area. Also, such an alternative would have been in substantial accordance with constituents' expectations i. As a consequence, the agenda decision can be interpreted as a reaction of the IASB to the moves made by national standard setters that had filled the regulatory vacuum, initially left by the IASB.

In so doing, the IASB marked the field with its imprimatur and defended its role in the regulatory space Malsh and Gendron, In brief, the final response by the IFRS bodies to the cryptocurrency accounting problem has granted the standard setter to maintain its dominant role in the regulatory space and hinder national regulatory initiatives from local jurisdictions. However, the content of the decision seems unsatisfactory as it diverges from prevalent accounting practice as well as from the specific guidance issued by national standard setters.

Moreover, such decision contrasts with the usefulness and fair representation of accounting information by Board members' own admission. In this circumstance, the need to occupy the regulatory space appears to have prevailed over the desire to provide an appropriate response to constituents' expectations, thereby signalling an issue for a private standard setter aiming at developing high-quality and globally accepted accounting standards.

The present paper has intended to explore how the IASB has dealt with the emerging issue of accounting for cryptocurrencies by examining the four-year debate around accounting for cryptocurrency that developed between the IASB, the IFRS IC and their constituents. In so doing, the paper reveals the constituents' expectations and the motivations that surround the regulatory response offered by the IASB on the matter.

The paper analyses how the accounting problem of cryptocurrency holdings is constructed among the IASB and its constituents and discussed the solution offered by the IASB in light of its constituents' expectations and its motivations. The analysis has shown that the IASB formally responded to constituents' expectations, respecting the full and fair consultation principle, thus preserving its legitimacy.

However, the constituents' criticisms as well as the dissatisfaction expressed by some IASB members to the content of the agenda decision, show that in substance the IASB did not satisfy constituents' expectations to address the accounting problem arising from cryptocurrencies. First, the global standard setter showed resistance to the requests from national standard setters that were constructing the accounting problem of cryptocurrency holdings based on the claim that existing standards provided an inappropriate basis for their reporting.

Only when national standard setters started issuing national guidance — thus occupying the regulatory space — the IASB acted to defend its position in the space by requesting its interpretative body i. Such agenda decision resulted in the application of existing standards to account for an item that did not even exist when those standards were developed.

This controversial decision attracted strong criticism not only by IASB constituents but also by several Board members; both were making accounting claims regarding the usefulness and fair representation of the reporting outcome descending from such guidance. While the Board's choice of avoiding the standard setting was appropriately motivated by the long IFRS due process and the uncertainty surrounding cryptocurrencies, alternative interpretations more in line with constituents' expectations and the principle-based nature of IFRS were available.

As a consequence, we argue that such a decision was motivated more by the IASB's need to defend its dominant position in the regulatory space rather than appropriately respond to its constituents' expectations. With its results, the paper contributes to the accounting regulation and standard setting research by providing insights into the IASB response to a regulatory vacuum regarding a new class of items, which can be better understood through the theoretical lens of regulatory space.

In so doing, it also responds to the call for more research on the dialogue between the global standard setter and local jurisdictions Camfferman and Zeff, , by shedding light on the pressures exerted by the IASB constituents and their impacts on IASB decisions. Indeed, accounting issues arising in national jurisdictions generate expectations on the global standard setter's activity, which in this case seems aimed at defending its position in the regulatory space rather than providing an appropriate accounting solution.

The emergence of disruptive technology has been shown to impact the contested arena of accounting regulation, by reversing the participants' roles: the constituents asking for accounting change and the standard setter trying to resist such pressures while defending its position.

This study has also some policy implications. First, it provides insights on the limits of the IASB long regulatory process in the circumstance of emerging accounting issues deriving from rapidly-evolving technology, which are expected to grow in the next future and might be better tackled with a specific task force.

In particular, it highlights the contrast between the rapid pace of technological innovation and the time and information required for a due process aimed at developing high-quality accounting standards. Our analysis has shown that the length of the due process may represent a constraint to undertake standard setting, suggesting that a faster IFRS due process for emergent and urgent issues could be useful to address the challenges posed by the new digital era.

Secondly, it provides insights on the role of the agenda decision showing its growing importance in the IFRS environment as well as its limits when used in the context of a regulatory vacuum. The guidance provided in the agenda decisions is now explicitly mandatory IFRS Foundation, , even if it contrasts with prevailing practice and is not subject — at least so far — to any endorsement process in several jurisdictions. The IASB also tried to introduce the agenda decisions in its own due process but was heavily contrasted by constituents in the recent review of the Due Process Handbook, thus confirming the controversial role of this tool in the IFRS regulatory space.

The growing importance of agenda decisions as well as the variety of alternatives proposed in comment letters e. The study has also some limitations, as it has considered only public documents, due to the novelty of such a topic. It may also benefit from the analysis of financial reports of companies that will report cryptocurrency holdings.

In our initial access October , they were in total, including Bitcoin; Etherum and Tether as the top three on the list, detaining a total of billion USD of market capitalisation. In addition to their mandate, its members can undertake research, provide guidance on the IASB's priorities, cooperate on outreach, encourage stakeholders' inputs and identify emerging issues IFRS Foundation, , para 3.

According to the IFRS IC interpretation, a holding of cryptocurrency meets the definition of an intangible asset under IAS 38 because 1 it is capable of being separated from the holder and sold or transferred individually; and 2 it does not give the holder a right to receive a fixed or determinable number of units of currency. Our analysis encompasses all the twenty-three comment letters received by the IFRS IC and published on the IFRS official website, including three late letters received up to two weeks after the deadline of the public consultation.

Artiach , T. Bal , A. Baudot , L. Bernstein , M. Bhimani , A. Botzem , S. Bowen , G. Boyatzis , R. Bradbury , M. Camfferman , K. Canning , M. Chapple , S. Cuervo , C. Durocher , S. Dwyer , G. Erb , C. Fereday , J. Fogarty , T. Gatti , M. Georgiou , G. Gillis , P. Giner , B. Hancher , L. Hansen , T. Hileman , G. Holub , M. Howieson , B. Jorissen , A. Kenny , S. Klein , M. Klein , T. Larson , R. However, more specific guidance on crypto would probably be welcome.

In one comment letter submitted by the Chamber of Digital Commerce, representatives urged the board to add standard-setting for digital assets and cryptocurrency to the near-term agenda. It contains nonauthoritative guidance on how to account for and audit digital assets under U. GAAP for nongovernmental entities in addition to generally accepted auditing standards.

Practice Management. Follow Us In Real Time twitter facebook linkedin. Tags Accounting Audit standards. By Michael Cohn CloseText. About Michael. Close extra sharing options. Michael Cohn. Editor-in-chief, AccountingToday. For reprint and licensing requests for this article, click here. The Internal Revenue Service updated its frequently asked questions page on the Recovery Rebate Credit, with additional information on receiving the credit on a tax return.

By Michael Cohn. SMEs enthusiastic about crypto, Metaverse. Finance leaders at small and midsized entities are increasingly embracing cryptocurrencies and have an eye towards the nascent Metaverse, says a recent Sage Intacct report.

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