Audit risks for digital assets in Uganda

This paper explores the emerging audit risks posed by digital assets in Uganda, where cryptocurrencies and blockchain-based tools are gaining visibility despite lacking clear regulatory recognition. While these innovations promise benefits such as financial inclusion and efficient remittances, they also introduce significant challenges for auditors. Key risks include verifying ownership and control of assets held in anonymous wallets, coping with the extreme volatility of valuation, assessing the reliability of smart contracts, and managing high transaction volumes that overwhelm traditional audit procedures. The absence of legal tender status and fragmented regulatory oversight further complicates auditors’ ability to provide accurate and reliable financial reporting. These gaps heighten the potential for fraud, misstatements, and money laundering, creating liability risks for auditors navigating an uncertain legal environment. The study highlights the urgent need for capacity-building among Ugandan auditors, adoption of blockchain-specific audit tools, and the development of clear regulatory frameworks. Strengthening oversight, training, and technology adoption will be critical in ensuring that digital assets contribute to innovation without undermining financial reporting integrity.