SEC Commissioner Hester Peirce recently expressed her concern over the US Securities Exchange Commission’s (SEC) warning to accounting firms over potential misrepresentations of work done by non-auditors as full audits.
Paul Munter, the Chief Accountant in the SEC’s Office, had cautioned that accounting firms working with cryptocurrency should be wary of “potential pitfalls” related to the assurance work they undertake for crypto companies, particularly crypto trading platforms.
Munter warned that some crypto asset trading platforms have marketed to investors that their third parties, sometimes accounting firms, have performed “audits”. He stated that non-audit arrangements are not at parity with, or even more “precise” than, a financial statement audit. He also noted that any accounting firm in conflict with a crypto client due to misrepresentations must make the public aware, and must inform the SEC.
In response, Peirce argued that discouraging cooperation between crypto platforms, their accountants, and customers could mean mainstream accounting/audit firms keep off crypto, likely to the detriment of consumers. She believes that crypto platforms and their accountants should be clear on what proof of reserves is and isn’t, and that customers should understand the limitations, but that the SEC should not discourage good-faith efforts to provide more transparency.
