Disclaimer
This article is for educational purposes only and does not constitute accounting, tax, or legal advice. Crypto accounting involves complex regulatory and technical considerations. Always consult with a certified professional (CPA or equivalent) to design a reconciliation workflow and general ledger configuration that suits your specific business needs before making any final financial decisions.
Introduction
Crypto accounting is inherently complex because data moves through a critical pipeline before it reaches your financial statements. First, transactions are ingested from the blockchain into a crypto sub-ledger (like Cryptoworth) to calculate cost basis and fair market value. Finally, summarized journals are pushed to your general ledger (GL), such as QuickBooks.
Even if your integrations seem to be working, blindly trusting the automated flow is risky. Data can be dropped, duplicated, or mislabeled during ingestion. Without a repeatable reconciliation process, you cannot be certain that the numbers in your financial reports reflect reality. This guide outlines a streamlined "two-check" workflow to verify data completeness and accuracy across your accounting pipeline.
Why Three Separate Checks Are Needed
To guarantee accuracy, you must verify the data integrity at two distinct hand-off points:
Check 1: Blockchain Reported Balance vs. Computed Balance (Data ingestion accuracy)
Check 2: Crypto Sub-ledger vs. General Ledger (Financial reporting accuracy)
Check 1: Blockchain Reported Balance vs. Computed Balance
Goal: Verify that your crypto accounting system has correctly ingested the blockchain data and that the math adds up.
The most fundamental check in crypto accounting is ensuring your sub-ledger's history matches the current reality of the blockchain. In sophisticated sub-ledgers like Cryptoworth, you will often see two distinct balance types for every wallet:
Reported Balance (The Truth): This is the balance the software reads directly from the blockchain for connected wallets or directly from the exchange APIs. This balance tells you exactly what is sitting in the wallet on-chain or on the exchange.
Computed Balance (The Math): This is the balance the software calculates by summing up every single transaction (deposits minus withdrawals) it has imported throughout history.
The Reconciliation Logic:
Ideally, Reported Balance - Computed Balance = 0.
If there is a discrepancy, it means your data is incomplete. For example, if the Reported Balance is 10 ETH, but the Computed Balance is only 9 ETH, the software is missing a 1 ETH deposit transaction in its history.
How to Perform the Check:
Cryptoworth’s Sanity Check report automatically flags discrepancies between the blockchain’s reported balance and the system’s calculated balance.
You should review this report before closing the books for the month.
Match: If the numbers match, your transaction history is complete.
Mismatch: If they do not match, you must investigate missing API data, unclassified bridge transactions, or specific smart contract interactions that the indexer may have missed.
The Verdict: You cannot proceed to financial reporting until the computed balance matches the reported balance. If you skip this check, your revenue or asset holdings will be under-reported.
Check 2: Crypto Sub-ledger vs. General Ledger (GL)
Goal: Ensure that the final accounting numbers in your ERP match the sub-ledger.
Once you have verified that the sub-ledger data is accurate (Check 1), you must ensure that this data has been correctly transferred to your General Ledger (GL). This is the critical step for financial reporting.
2.1 The Reconciliation Workflow
To perform this check, you compare the Cost Basis tracked in your sub-ledger against the Asset Account Balance in your GL.
In the Sub-ledger: Run an "Unrealized Gain/Loss Report" or "Portfolio Report" as of month-end. Identify the total Cost Basis for a specific asset (e.g., BTC).
In the GL: Pull the Balance Sheet or Trial Balance. Look at the balance of the corresponding Digital Asset account.
Match: The two numbers should be identical.
2.2 Practical Example
Imagine your sub-ledger reports the following Cost Basis:
BTC: $120,000
ETH: $80,000
You then check your GL (NetSuite/QuickBooks) and see the following:
Asset | Sub-ledger Cost Basis | GL Account Name | GL Balance | Difference |
BTC | $120,000 | Digital Asset – BTC | $120,000 | $0 |
ETH | $80,000 | Digital Asset – ETH | $75,000 | -$5,000 |
Analysis:
BTC: Reconciles perfectly. You can trust this number.
ETH: The GL is missing $5,000 worth of cost basis. This non-zero difference implies a synchronization error. It could be a missing journal entry for a purchase, a duplicate disposal entry, or a mapping error where an ETH purchase was accidentally booked to a different account.
Pro Tip: The Unrealized Gain/Loss report provides the definitive Cost Basis for each asset, which serves as the source of truth for your General Ledger.
2.3 Why GL Configuration is Critical
Successful reconciliation depends heavily on how you structure your Chart of Accounts.
A clear Chart of Accounts in Cryptoworth allows you to map specific wallets and transaction types (like fees or realized gains) to distinct GL lines, simplifying the reconciliation process.
The "Bucket" Approach (Poor): If you book all crypto into a single "Digital Assets" GL account, you can only reconcile the grand total. If there is a $5,000 variance, you will have to dig through every transaction for every asset to find it.
The Per-Asset Approach (Better): Creating separate accounts like "Digital Asset (BTC)" and "Digital Asset (ETH)" allows you to isolate discrepancies by asset, as shown in the table above.
The Granular Approach (Best): Advanced teams may use accounts like "Digital Asset (BTC) – Coinbase" vs. "Digital Asset (BTC) – Wallet A". This allows for rapid identification of exactly where the error occurred, simplifying audits significantly.
Use the Journal Summary By GL Account report to verify that your Bitcoin transactions are actually hitting the 'Digital Asset - BTC' account and not a generic bucket.
Summary
Trusting your crypto financials requires a verify-then-trust approach. By implementing this two-check workflow, you create a closed loop of data integrity:
Check 1 (Data Integrity): Does the sub-ledger's Computed Balance match the blockchain's Reported Balance?
Check 2 (Financial Integrity): Does my General Ledger accurately reflect the cost basis from the sub-ledger?
While software like Cryptoworth automates the heavy lifting, the final sign-off should always come from this systematic reconciliation process.
Important Reminder
This article is not accounting, tax, or legal advice. Every company has unique reporting requirements. You must work with a certified accounting professional to design, approve, and implement your reconciliation processes and General Ledger configuration to ensure compliance with applicable standards.