The Public Company Accounting Oversight Board released a document Tuesday with information for auditors and audit committees about audits involving cryptoassets, such as Bitcoin and other digital currencies.

The Spotlight document, Audits Involving Cryptoassets – Information for Auditors and Audit Committees, is part of the PCAOB’s Strategic Plan to monitor the development and implementation of emerging technologies to analyze their implications for the quality of audit services.

The PCAOB’s staff has noticed that cryptocurrencies such as Bitcoin have recently started to be recorded and disclosed in the financial statements of companies, broker-dealers and other issuers. When doing inspections of auditors of some smaller issuers, the PCAOB’s staff has seen situations where transactions involving cryptoassets were material to the financial statements.

The document discusses some of the issues that auditors should consider when handling their responsibilities under PCAOB standards for auditing issuers who are transacting in or who hold cryptoassets.

Some of those issues may involve fraud: “In identifying fraud risks, the discussion among the key engagement team members about the potential for material misstatement due to fraud may include, for example: the risk of management override of controls over the private keys, which may result in misuse or misappropriation of holdings of cryptoassets by those who control the keys; the susceptibility of the financial statements to material misstatement through transactions with related parties; the related parties’ identities may be difficult to ascertain because of the pseudonymous nature of transactions involving cryptoassets.”

The document also includes some questions that audit committee members could have for auditors when transactions involving cryptocurrency or crypto holdings are material to the issuer’s financial statements.

Among the questions are:

• What is the experience of the engagement partner and other senior engagement team members with cryptoassets?
• Would the firm be able to supplement the engagement team’s expertise if necessary (e.g., by engaging relevant specialists)?
• What is the auditor’s understanding of the technology underlying the issuer’s cryptoasset-related activities?

The information in the document may be of special interest to auditors and audit committee members of issuers that are starting to transact in, or already hold, cryptocurrencies.