Preparing Your CASP for Its First Statutory Audit

For many Crypto-Asset Service Providers (CASPs), the first statutory audit represents an important milestone in the development of the business. Whether the organisation has recently obtained authorisation, expanded its operations or reached the stage where an independent audit is required, careful preparation can significantly improve the efficiency of the audit process.

Unlike many traditional businesses, CASPs operate within a technology-driven environment characterised by blockchain transactions, digital asset custody, evolving regulatory requirements and complex accounting considerations. These factors require management to maintain comprehensive accounting records, robust governance arrangements and effective internal controls throughout the financial year.

Preparing for a statutory audit should not begin shortly before year-end. Instead, it should form part of an ongoing governance and financial reporting process that enables management to produce reliable financial information while supporting the auditor's work.

Our firm specialises in the statutory audit of Cyprus Crypto-Asset Service Providers and other blockchain businesses, helping organisations prepare for their first audit with confidence while ensuring compliance with International Standards on Auditing (ISA) and applicable financial reporting requirements.

The quality of audit preparation has a direct impact on the audit process.

Well-prepared organisations generally experience:

Conversely, incomplete documentation, poor reconciliations or unclear accounting policies frequently result in additional audit procedures and delays.

The statutory auditor is responsible for expressing an independent opinion on the financial statements.

Management and the board of directors remain responsible for:

• preparing the financial statements;
• maintaining adequate accounting records;
• implementing effective internal controls;
• safeguarding company assets;
• selecting appropriate accounting policies;
• complying with applicable legislation; and
• assessing the entity's ability to continue as a going concern.

Understanding these responsibilities is an important first step in preparing for the audit.

Accurate accounting records form the foundation of every statutory audit.

Management should ensure that records are maintained throughout the year rather than being reconstructed after the reporting period has ended.

Typical records include:

All material transactions should be supported by appropriate documentation.

Blockchain businesses frequently operate numerous wallets across different blockchain networks.

A central wallet register should identify:

The wallet register should be reviewed regularly to ensure completeness and accuracy.

One of the most common causes of audit delays is incomplete reconciliation of digital asset balances.

Management should reconcile:

Reconciling throughout the year allows discrepancies to be identified and resolved promptly.

Management should document accounting policies covering all significant aspects of the business.

Examples include:

Policies should be reviewed annually to ensure they remain appropriate for the entity's operations.

Auditors will frequently request supporting contractual documentation.

Management should maintain organised records of:

Maintaining an electronic document repository can significantly improve audit efficiency.

Before the audit begins, management should evaluate whether internal controls remain appropriate.

Areas to review include:

Weaknesses identified internally can often be addressed before the audit commences.

Board minutes often provide important audit evidence regarding significant decisions.

Management should ensure that minutes appropriately document:

Minutes should be approved and retained in accordance with the organisation's governance procedures.

Directors are responsible for assessing whether the company is able to continue operating for the foreseeable future.

This assessment should consider:

Supporting documentation should be available for the auditor's review.

A successful statutory audit begins long before the auditor arrives. By maintaining reliable accounting records, documenting accounting policies, strengthening internal controls and preparing supporting information throughout the year, directors can significantly improve both the efficiency and quality of the audit process.

Our firm provides statutory audit services to Cyprus Crypto-Asset Service Providers and other blockchain businesses. We work closely with management to ensure that organisations are well prepared for their statutory audit while maintaining the independence and professional objectivity required under International Standards on Auditing.

If your organisation is preparing for its first statutory audit under the MiCA regulatory framework, our experienced blockchain audit team would be pleased to discuss your requirements and explain how we can support your business through every stage of the audit process.