A content analysis on the comment letters to IFRS IC: Accounting for cryptocurrencies
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2022
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Abstract
Cryptocurrency is changing the world. Its use and potential for profits have garnered the attention of businesses. In June 2019, The IFRS IC published the agenda decision regarding the holdings of cryptocurrencies. Of which, they concluded that cryptocurrencies are to be reported using IAS 2 Inventories if they are held for sale in the ordinary course of business, and IAS 38 Intangible Assets if the former is not applicable. Majority of the respondents to the tentative agenda decision had already disagreed with it but it was passed nonetheless with few considerations of the issues stated. Thus, this study aimed to look at how the accounting treatments recommended by the IFRS IC inadequately present cryptocurrencies and what should accounting standard setters do to address the current concerns regarding financial accounting and reporting of cryptocurrencies. A content analysis on the 23 comment letters to the agenda decision of the IFRS IC was conducted. This process was aided by NVivo, a qualitative data analysis software. The researchers found that IAS 2 may not fully capture, or may even distort, the actual economic implications of cryptocurrency holdings on an entity’s financial position. The main arguments being that cryptocurrencies may not meet the nature of inventories and that the measurement using LCNRV may not provide relevant information on the true value of holdings of cryptocurrencies. As for IAS 38, the issues are with regard to its appropriateness, nature, timeliness, and measurement. As for other standards that were recommended such as cash and financial instruments, it may be possible that these standards are applicable to the accounting of cryptocurrencies however since the data is scarce, more research needs to be conducted. As for the suggestions of how to proceed with the accounting of cryptocurrencies, a standard-setting project was the most recommended. With this, the researchers recommend that an industry survey and a project on the accounting of cryptocurrencies be conducted.
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| Authors | Rizada, Mark G. |
| Journal | Malay Journal |
| Year | 2022 |
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