Considerations for Auditing Clients Dealing in Cryptocurrency

The video discusses the challenges auditors face when dealing with clients in the cryptocurrency sector. It highlights the importance of assessing client integrity, understanding the competencies required, and evaluating the internal control environment. The case of Quadriga is used to illustrate red flags and the complexities of auditing in this space. The video also touches on trading strategies and the lessons learned from early experiences in cryptocurrency trading.

What was the primary reason CPA Canada developed a white paper on cryptocurrency?

• To promote cryptocurrency investments

• To provide guidance to auditors with clients in the cryptocurrency space

• To regulate cryptocurrency exchanges

• To ban cryptocurrency transactions

What was a significant red flag for Quadriga after it went public?

• The company had no competitors

• The company had no customers

• All independent directors and the CFO resigned

• The company was highly profitable

Why did the public largely ignore the red flags associated with Quadriga?

• The company was endorsed by regulators

• The wealth effect and parabolic rise in token value

• The company had a transparent business model

• The company had strong financial backing

What challenge did auditors face when evaluating competencies in cryptocurrency?

• Strict government regulations

• Lack of interest in cryptocurrency

• Difficulty in assessing expertise in a new sector

• Overabundance of experienced professionals

What was a major issue with the internal control environment in cryptocurrency trading?

• Lack of integrated trading risk management systems

• Excessive government oversight

• Too many experienced traders

• High transaction fees

How did the traditional stock trader hired later differ in their approach to trading cryptocurrency?

• They used a buy-and-hold strategy

• They relied on technical analysis and used long and short trading strategies

• They focused solely on fiat currency

• They avoided trading cryptocurrency altogether

What was the outcome of the 'experienced' crypto traders hired initially?

• They were fired for incompetence

• They successfully managed the trading desk

• They left to start their own crypto fund

• They were promoted to senior positions