Digital Asset Audit
Independent verification of an entity's Bitcoin holdings: their existence, ownership (control of the keys), and valuation.
Definition
A digital asset audit is the independent verification, by an external auditor, that the Bitcoin holdings an entity reports on its balance sheet are real, belong to it, and are correctly valued. It is a pillar of credibility for any listed treasury company: without an audit, the BTC figures on the balance sheet are just an assertion.
The audit addresses three questions. Existence and ownership: the auditor verifies control of the private keys, typically by requesting a cryptographic signature from the declared addresses (a form of proof of reserves) or by reviewing the custodian's controls. Valuation: it checks that the Bitcoin is recorded at fair value under the applicable accounting standard (ASC 350-60 in the U.S.). And controls: it assesses the robustness of custody, segregation of duties, and key management. The major audit firms and frameworks such as the AICPA's have developed crypto-specific methodologies as corporate Bitcoin has gone mainstream.
In Context
To audit a treasury company's Bitcoin, the auditor can request a signature from the address holding the funds: it proves control of the keys without moving the asset.
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