U.S SEC Warns Crypto Accounting Firms for Misleading Auditing Claims

• The PCAOB issued a warning that these reports are not audits.
• Paul Munter is SEC’s principal advisor on accounting and auditing concerns.

Companies in the crypto sector have come under increased scrutiny after recent scandals and bankruptcies in the industry. This scrutiny has extended to businesses, including accounting firms, who have been employed by these companies.

Paul Munter, the SEC’s principal advisor on accounting and auditing concerns, issued a warning to crypto accounting companies on Thursday for improperly marketing their services as “audits.”

Misleading Investors Claim

According to Munter, some of these companies’ clients promote their services as being “parity” with an audit of the financial statements. Also, the expert referred to a PCAOB report from March. The report cautioned investors against accounting companies offering Proof of Reserves (PoR) reports for cryptocurrency exchanges.

Moreover, some cryptocurrency exchanges employ Proof of Reserves (PoR), an accounting mechanism based on the blockchain. This is to confirm the total quantity of crypto assets in their possession. The PCAOB issued a warning that these reports “are not audits.” Since they do not take into consideration the obligations of a crypto corporation, among other things.

Also, accountants working with crypto businesses that mislead investors about the nature of the former’s work may be held accountable under securities rules, according to Munter’s statement.

When accounting firms discover their customers have made false or misleading claims, the OCA advises a “noisy withdrawal, disassociating itself from the client, including by way of its own public statements.” Furthermore, after publishing a PoR report on Binance in December 2022, the accounting firm Mazars Group severed ties with the cryptocurrency industry as a whole.

Highlighted Crypto News Today:

Top 10 Cryptocurrencies To Buy in August 2023