What about the risks associated with holding the cryptocurrency on the exchange? There has been a number of exchanges that have experienced liquidity issues and have frozen the cryptocurrency held on their exchange. Other exchanges have also admitted that if they were to face an insolvency event, the cryptocurrency held on behalf of their clients is at risk.

Would a qualification for this be appropriate? I have previously raised as an audit management letter point for the trustees to consider and be aware of.

Thanks a lot Yateender and Dharam

I think we have to check the correctness of any capital gain/loss shown in financials. We can obtain the report from Accountant/Trustees regarding calculation of Gain/Loss. It will help in checking whether financials show correct figures.

The issue is 'how we can assure that the reports provided are not photoshoped?

Thanks a lot for reply me

Hi Phuong

From a financial audit perspective having the Coinspot reports should give you audit evidence re the existence and valuation of the asset as at 30 June 2021 and the transactions relating to the 2020/21 year.

Other issues / documents to consider / obtain (as part of your audit) are:

1) Is the Coinspot report in the name of the Fund?

2) Is the Crypto stored with Coinspot or in cold storage?

3) Does the Fund's trust deed allow investing in Crypto?

4) Does the Fund's investment strategy allow investing in Crypto?

5) Does the Fund's financial statements make reference to the decrease in value of certain Crypto assets post 30/6/2021? (Was the asset sold post 30/6/2021?)

6) Should you issue a Part A financial audit report qualification?

7) Should you issue a Part B compliance audit report qualification (& lodge an ACR)?

8) Should you raise any concerns re crypto in your annual trustee / management letter?

As an example the extract of the audit report re a Part A qualification re Crypto would state:

“Part A: Financial audit

Qualified Opinion

I have audited the special purpose financial report of Smith Superannuation Fund

comprising the statement of financial position as at 30 June 2021, and the operating

statement, a summary of significant accounting policies and other explanatory notes.

In my opinion, except for the effects on the financial report of the matter referred to in the Basis of Qualified Opinion section of my report below, the financial report

presents fairly in all material respects, in accordance with the accounting policies

described in the notes to the financial report the financial position of the fund at 30

June 2021 and the results of its operations for the year then ended.

Basis for Qualified Opinion

The Fund Trustee has invested in Cryptocurrency as at 30 June 2021. The total

carrying value of this investment is $120,000 as at 30 June 2021. As we have not

received reliable audit evidence to support the ownership of these assets we provide no opinion on the market value of these Cryptocurrency as at 30 June 2021."

If other member's have a view on the above issues that would be appreciated.

Below is a report from Coinspot's website showing change in value of Bitcoin from 30/6/2021 until today.

Thanks

SMSF AAA