DIGITAL ASSET IMPAIRMENT TESTING: APPLYING TRADITIONAL METHODS TO VOLATILE FINTECH INSTRUMENTS

Digital asset impairment accounting in South Africa has been challenged by legacy valuation models ill-suited for fintech volatility. With the fintech sector expanding by 148% between 2020 and 2024, this study investigated how impairment risk complexity-comprising market dynamics, valuation techniques, and data infrastructure-affects impairment reporting accuracy under the moderating influence of audit and oversight environments. Using secondary data from 50 fintech entities, regression and diagnostic tests (ADF, VIF, DW, Breusch-Pagan) were conducted to ensure validity. Results revealed that market dynamics (β = 0.387, p< 0.001), valuation techniques (β = 0.352, p< 0.001), and data infrastructure reliability (β = 0.339, p< 0.001) were significant predictors of reporting accuracy, with audit oversight also contributing (β = 0.298, p< 0.001). The model’s explanatory power was high (R² = 0.82), while the strongest correlation was between market dynamics and reporting accuracy (r = 0.88). The study concludes that volatility-sensitive valuation models, real-time data systems, and enhanced auditor competencies are essential to IFRS/IAS-compliant reporting. It recommends adoption of fair value techniques, integration of blockchain audit trails, and regulatory standardization to improve financial transparency in digital asset environments.