Bitmain IPO: interesting take on Cryptocurrency

Is cryptocurrency an asset for a company that transacts in it? Bitmain Technologies, the world’s largest designer of products used for mining cryptocurrencies, is bringing its IPO to Hong Kong. This has definitely created a lot of buzz in the cryptocurrency filed. It has also created a lot of interest in the accounting world.

Cryptocurrency adds a level of complexity in accounting. When you pay for goods/services used to produce your final product and when you receive payment for the final product; those transactions are all categorized under operating cash flows. But now consider that you pay in physical currency; but you receive payment in cryptocurrency – so not physical currency. The way Bitmain is accounting for the inflow is, it considers it as cash from investing. So not a operating transaction but an investing transaction. They invest in cryptocurrency and when they need physical currency they convert the cryptocurrency.

Also they are accounting for the cryptocurrency at cost; in order to avoid distorting the financials due to huge fluctuations in the world of cryptocurrency. As these are material numbers on the financials and considered assets on the books of Bitmain, I am sure the investors would like to understand how the fluctuations in the value of cryptocurrencies affects the financials. Might be a better idea to revalue the assets to fair value at end of each accounting period.

Their IPO documents are definitely a very interesting read.

Bankrate CFO sentenced to 10 year in prison


Edward DiMaria, the former CFO of Bankrate was sentenced 10 years in prison and asked to pay restitution of $21M for accounting fraud. DiMaria pleaded guilty to one count of conspiracy to making false statement’s to a public company’s accountant and one count of making materially false statement to the Securities and Exchange Commission.

In his defense DiMaria stated that the fraud did not bring down the company and amounted to only a small portion of the company’s revenue. Thats a strange defense! Federal prosecutors countered that the fraud cost the shareholders more than $25 million.

DiMaria admitted that from 2010 to 2014 he ran a scheme to artificially boost Bankrate’s earnings through “cookie jar” or “cushion” accounting. Millions of dollars in unsupported expense accruals were left on Bankrate’s books and then reversed in later quarters to inflate earnings. DiMaria called the cookie jar accounting an incremental smoothing of earnings!

 

 

Series A funding: Taxfyle

Coral Gables, Florida-based Taxfyle, an on-demand licensed accounting platform, has raised $4.1 million in Series A funding.

Exxon Mobile cleared by SEC

In a letter the Securities and Exchange Commission sent to Exxon, the commission stated that their investigation was concluded and that the commission doesn’t intend to recommend any enforcement actions. The SEC probe into ExxonMobil was whether the company misled the investors about its knowledge of climate change and the potential effects on its business.

Nepal Auditor General Office audits its local governments

Failure to ensure proper billing of income or expenses. differences between banking transactions and accounting of those, lack of maintaining details of assets, are some of the issues the Nepalese Office of Auditor General (OAG) found as it audits financials transactions of the local governments for the very first time. The office will be publishing its report in mid March which will give more details of their findings.

Why the recent audits you may ask, well the new constitution authorized the office to audit the finances of local governments- municipalities and rural municipalities.  Under previous constitutions, the OAG audited transactions of various state organs, constitutional bodies and offices under the central government, but the local bodies used to have audits as provisioned by the Local Self-Governance Act-1999.

Would the audits bring more accountability at the local government level, only time would tell.