The USA Securities and Trade Fee’s (SEC) Commissioner Hester Peirce questioned why the regulator needs to discourage good-faith efforts to supply extra transparency for the cryptocurrency trade in a July 27 tweet.
Peirce was reacting to an announcement from the SEC chief accountant, Paul Munter, who warned that accounting companies appearing as performing “audit” duties for crypto companies threat censure or suspension if their findings are misrepresented.
Whereas Peirce conceded that crypto companies and their accountants ought to be clear on proof of reserve, she argued that the regulator shouldn’t discourage good-faith efforts to supply extra transparency to the crypto scene.
SEC’s warning to accounting companies
In accordance with a July 27 assertion, Munter acknowledged that any accounting agency whose purchasers make “materials misstatements” about its “audit” scope dangers authorized liabilities, and it may very well be implicated within the antifraud provisions of the federal securities legal guidelines.
Munter wrote:
“As accounting companies more and more interact on this form of non-audit work, their purchasers’ advertising and marketing and terminology dangers misleadingly suggesting that these different, non-audit preparations are at parity with, or much more “exact” than, a monetary assertion audit. Such options are false. Non-audit preparations are neither as rigorous nor as complete as a monetary assertion audit, and will not present any cheap assurance to buyers.”
Munter acknowledged that an accounting agency that turns into conscious {that a} shopper has made deceptive statements in regards to the nature of its non-audit work “ought to think about making a loud withdrawal, disassociating itself from the shopper, together with by the use of its public statements, or, if that’s not adequate, informing the Fee.”
The regulator’s accountant additional suggested accounting companies to keep up independence to bolster the integrity of the monetary reporting system.
Following FTX’s collapse final yr, a number of crypto companies instantly launched a proof-of-reserve scheme that confirmed proof of their crypto holdings. Nevertheless, the system quickly generated a lot criticism after a number of auditors, together with Mazars and Armanino, dropped their crypto purchasers after the efficacy of their stories was questioned.
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