Reduce virtual asset accounting confusion… Promote strengthening of public disclosure by FSS

Financial authorities are strengthening disclosures related to virtual assets. It was decided to make it mandatory to establish newly annotated disclosures on virtual asset issuance (sales) and payments, and information relating to virtual asset operators. In addition, it intends to prepare and distribute audit guidance relating to virtual assets.

On the 15th, the Financial Supervisory Service prepared a plan to support virtual asset accounting after discussions with related organizations such as the Korea Accounting Standards Service and the Korea Institute of Certified Public Accountants and private experts. This is because the need for transparent information related to virtual assets has increased due to the recent Terra Luna crisis and FTX’s bankruptcy filing.

Regarding virtual assets, accounting issues arise in terms of △development and publishing (publisher) △selling (publisher) such as pre-sale △ acquisition (holder) △ market transaction (exchange of virtual assets). International Financial Reporting Standards (IFRS) treat virtual assets as inventory assets when they are held for business purposes, and treat them as intangible assets otherwise. Nothing else was decided, so there was a lot of confusion in the accounting and auditing process.

The Financial Supervisory Service intends to make a new publication on the issuance and holding of virtual assets and information relating to virtual asset operators. We also intend to make a disclosure requirement paragraph in the accounting standard. In addition, it was decided to prepare and distribute best practices including specific examples of writing so that companies can write annotations faithfully.

The Korea Accounting Standards Board decided to guide virtual asset accounting issues and considerations in the application of accounting standards through seminars, etc. In addition, it was decided to consider establishing separate accounting standards for virtual assets in the medium to long term by referring to the position of the International Accounting Standards Committee.

The Korea Chamber of Commerce decided to prepare guidelines for the examination of virtual assets. This is to understand the risks of auditing virtual assets and ensure appropriate audit quality.

The Financial Supervisory Service and related organizations intend to hold a joint seminar on the 28th of next month to gather external views. An official from the Financial Supervisory Service said, “We will consult with the Financial Services Commission to strengthen public disclosure related to virtual assets and confirm guidelines for accounting audits.”

Reporter Seo Hyeong-gyo

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.