This chapter provides a comprehensive foundation for auditing bitcoin-associated balances and transactions. It sets the stage for developing the Bitcoin Audit Framework (BTC_AF) and examines the application of International Standards on Auditing (ISA) to blockchain-based digital assets. The chapter addresses the complexities auditors encounter in validating management assertions for entities engaging with these assets. Such practices range from self-custody to third-party custody. These practices have a significant impact on financial statement assertions related to transactions and balances. Using the International Financial Reporting Standards (IFRS) framework, the chapter outlines principles for recording blockchain-based digital assets in financial statements, ensuring transparency and compliance with relevant standards. Key audit assertions, i.e., existence, ownership, completeness, valuation, and accuracy, are analyzed in the blockchain context. Challenges such as verifying multi-signature ownership and addressing valuation discrepancies across jurisdictions are also explored. In the context of bitcoin, substantive procedures are considered essential for addressing material transactions and balances while aligning audit practices with evolving regulatory and technological landscapes.