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On November 2, 2023, Sam Bankman-Fried (SBF), founder and CEO of the cryptocurre
On November 2, 2023, Sam Bankman-Fried (SBF), founder and CEO of the cryptocurrency exchange FTX, was convicted of seven charges of fraud and conspiracy for defrauding crypto investors billions of dollars. Separately, Changpeng Zhao, founder and CEO of Binance, the world’s largest cryptocurrency exchange, pleaded guilty on November 21, 2023 to a charge of failure to maintain an effective anti-money laundering program at Binance. Both are currently awaiting sentence. To many people, the rise and fall of SBF and Zhao reminds them of the state of the volatile markets for cryptocurrencies.
In this individual writing assignment, you are asked to write a report of up to 6 pages using Word, double-spaced, size 12 Times New Roman font, to address the following required questions about accounting for crypto assets. Your report should reflect your own work. At the end of your report, you need to provide a list of references used, including generative AI apps such as ChatGPT and Gemini, which does not count toward the page limit. You may also include any exhibits or graphs in an Appendix, which also does not count toward the page limit.
Required:
Briefly describe crypto assets. Which features of crypto assets may make them challenging to accountants and auditors? Explain.
In December 2023, FASB published Accounting Standard Update (ASU) No. 2023-08, Accounting for and disclosure of crypto assets.
Why did FASB issue this ASU?
Before this ASU takes effect, how did a public company, who is not the creator/issuer of the crypto assets, account for crypto assets under US GAAP? Which topic(s) and subtopic(s) in the FASB Accounting Standards Codification (ASC) were usually applied? Include numeric citations of the ASC in your discussion.
What are the main changes FASB is making through this ASU? What arguments does FASB provide in support of these changes? Include numeric citations of the ASC in your discussion when applicable.
As an investor (user of financial information) and future accountant and auditor, do you agree or disagree with the changes FASB is making? Explain.
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