SEC Warns Against Misleading Crypto Audits

The SEC’s principal advisor on accounting and auditing issued a statement this week warning accounting firms working as crypto “auditors” against publishing misleading reports.

The US SEC warned firms acting as crypto “auditors” to carefully consider how their reports are marketed, claiming their work, in some instances, does not constitute the definition of auditing.

Crypto “Audits” May Not Provide Reasonable Assurance to Investors

Paul Munter, the SEC’s principal advisor on accounting and auditing, this week claimed in a statement that crypto companies have marketed their associations with accounting firms as auditors but said their work does not strictly comply with the definition of “auditing.”

Munter said:

“Certain crypto asset trading platforms, with others in the crypto industry, have marketed to investors their retention of third parties, sometimes accounting firms, to perform some sort of review of certain parts of their business, often presented as a purported “audit.”

Mr Munter further warned accounting firms not to label their reports as “financial audits,” as they are not as rigorous or comprehensive as true financial statement audits.

“As accounting firms increasingly engage in this sort of non-audit work, their clients’ marketing and terminology risks misleadingly suggesting that these alternative, non-audit arrangements are at parity with, or even more “precise” than, a financial statement audit.”

He continued by saying:

“Such suggestions are false. Non-audit arrangements are neither as rigorous nor as comprehensive as a financial statement audit, and may not provide any reasonable assurance to investors.”

Proof-of-Reserves Are Inherently Limited, and Customers Should Exercise Caution

The SEC’s accounting and audit principal referenced a public statement the Public Company Account Oversight Board (PCAOB) made in March. The board stated “proof-of-reserves are inherently limited” and “customers should exercise

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Author: Jana Serfontein

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