Accountancy Insights: Understanding Tokenisation Plans; Rethinking the Audit Report

Why It Matters

Tokenisation could reshape asset liquidity and settlement speed, demanding new accounting frameworks, while clearer audit reports enhance decision‑making for investors and regulators.

Key Takeaways

• UK aims to lead tokenisation, boosting liquidity and efficiency.
• Accountants must prepare for new asset classification and tax rules.
• Banks piloting tokenised deposits to enable programmable, instant settlements.
• Regulators plan to treat tokenised assets like traditional equivalents.
• KPMG pushes clearer audit reports to improve stakeholder comprehension.

Summary

The episode tackles two timely issues for finance professionals: the UK government’s push to make the economy tokenised and the ongoing effort to make audit reports more user‑friendly. Polly Sang explains tokenisation as the digital representation of real‑world assets on distributed‑ledger technology, promising faster, cheaper, and more liquid transactions, while also flagging technical, legal and accounting challenges. Key insights include the government’s three‑fold goal—competitiveness, efficiency, and unlocking dormant capital—alongside concrete steps such as the FCA and BoE’s call for input, the appointment of a wholesale digital‑assets champion, and pilots like tokenised bank deposits. Accountants face unanswered questions about asset classification, tax treatment, and compliance front‑loading, especially as interoperability and regulatory oversight remain immature. Sang cites practical examples: tokenising a shard of a sculpture, Lloyds’ mortgage tokenisation trial, and the limited market for tokenised Apple shares, illustrating where value may lie—in private‑market assets rather than already‑liquid equities. In the audit segment, KPMG’s Pamela Taylor reminds listeners that audit reports provide a material‑misstatement opinion and, for listed entities, highlight key audit matters that can guide investors, yet many find them dense and hard to digest. The implications are clear: finance firms must build capabilities for programmable assets, regulators need harmonised standards, and accountants should engage with ICAW’s digital‑asset working party. Simultaneously, audit practitioners must redesign reports to surface critical insights quickly, helping busy stakeholders make informed decisions.

Original Description

The government has plans to tokenise financial markets. What exactly is tokenisation? What might it look like in practice and what are the big questions about it that still need answering? Polly Tsang, ICAEW’s Senior Financial Services Regulatory Manager, explains.

After that, audit reports: ICAEW has created the Auditor Reporting Lab, alongside audit firms, to encourage modernisation in the market. KPMG Partner in Professional Practice, Accounting & Reporting, Pamela Taylor, has been thinking hard about how to make them more useful and more user-friendly.

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Links

•ICAEW: What is tokenisation, and what are the challenges for accountants? - https://www.icaew.com/insights/viewpoints-on-the-news/2026/may-2026/what-is-tokenisation-and-the-challenges-for-accountants

• Government tokenisation announcement - https://www.gov.uk/government/news/uk-fintech-backed-to-embrace-future-payments-technology

• FCA call for input on the future of tokenisation - https://www.fca.org.uk/publications/calls-input/future-tokenisation-joint-vision-authorities-uk-wholesale-markets

• ICAEW: Digital Assets Conference - https://www.icaew.com/learning-and-development/events/digital-assets-conference

• ICAEW: Auditor Reporting Lab - https://www.icaew.com/policy-and-research/thought-leadership/audit-and-assurance-thought-leadership/auditor-reporting-lab

• ICAEW: Rethinking the auditor’s report - https://www.icaew.com/policy-and-research/thought-leadership/audit-and-assurance-thought-leadership/auditor-reporting-lab/rethinking-the-auditors-report

• ICAEW: Audit and Assurance Conference - https://www.icaew.com/learning-and-development/events/audit-and-assurance-conference

• ICAEW podcasts - https://www.icaew.com/insights/podcast

Host

Philippa Lamb

Guests

Polly Tsang, Senior Financial Services Regulatory Manager

Pamela Taylor, Partner in Professional Practice, Accounting & Reporting, KPMG

Producer

Natalie Chisholm

Series Lead

Mark Rowland

Episode first published: 3 June 2026

Podcast recorded: 19 May 2026