Internal Accounting

Definition ∞ Internal accounting refers to the system an organization uses to record and manage its financial transactions and asset holdings. This process involves maintaining accurate records of all financial activities, including digital asset movements, liabilities, and revenues, for operational oversight and decision-making. It ensures that an entity has a clear and current view of its financial position. Robust internal accounting is essential for operational stability and regulatory reporting.
Context ∞ Accurate internal accounting is paramount for digital asset businesses, particularly exchanges and custodians, to ensure proper asset segregation and prevent commingling of funds, a frequent point of concern in crypto news. Deficiencies in internal accounting practices have contributed to major collapses and solvency issues within the digital asset sector. Regulators increasingly demand transparent and verifiable internal accounting from licensed digital asset firms.