Inspection Observations on Public Company Audits Involving Crypto Assets

This technical report presents inspection observations related to public company audits involving crypto assets, as outlined by PCAOB staff. It highlights specific responsibilities for auditors under PCAOB standards when auditing public companies and broker-dealers that transact in or hold crypto assets. The report details the unique risks associated with crypto assets, including volatility, lack of transparency, and potential for fraud. It emphasizes the importance of performing adequate tests of controls and substantive procedures to address assessed risks of material misstatement. The document also discusses common deficiencies identified during inspections, such as insufficient procedures for revenue recognition related to crypto asset mining and inadequate assessment of significant unusual transactions. Additionally, it underscores the need for auditors to apply professional skepticism and to consider the implications of related party transactions. The report aims to enhance the understanding of audit risks and responsibilities in the context of crypto assets.