{"id":2685,"date":"2023-08-03T16:29:54","date_gmt":"2023-08-03T20:29:54","guid":{"rendered":"https:\/\/seci.wpenginepowered.com\/?p=2685"},"modified":"2023-08-03T16:29:59","modified_gmt":"2023-08-03T20:29:59","slug":"chief-accountant-warns-auditors-about-crypto-asset-pseudo-audits","status":"publish","type":"post","link":"https:\/\/seciblog.pli.edu\/index.php\/chief-accountant-warns-auditors-about-crypto-asset-pseudo-audits\/","title":{"rendered":"Chief Accountant Warns Auditors about Crypto-Asset \u201cPseudo-Audits\u201d"},"content":{"rendered":"

On July 27, 2023, SEC Chief Accountant Paul Munter issued a Statement titled \u201cThe Potential Pitfalls of Purported Crypto \u2018Assurance\u2019 Work<\/a>.\u201d\u00a0 In the Statement, Dr. Munter notes:<\/p>\n

\u201cCertain 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 \u2018audit.\u2019\u201d<\/p>\n

The Commission and PCAOB have addressed the risks such \u201creports\u201d present to investors.\u00a0 This Investor Alert<\/a>and this PCAOB Investor Advisory<\/a> contain cautions about \u201cproof of reserve reports.\u201d<\/p>\n

Dr. Munter\u2019s Statement<\/a> is focused on issues auditors should address if they consider performing such work.\u00a0 The Statement addresses three principal areas:<\/p>\n

The Accounting Firm\u2019s Potential Liability for Antifraud Violations<\/strong><\/p>\n

This section addresses how a crypto company\u2019s potentially misleading description of the scope of work and the nature of the procedures performed could affect auditors.\u00a0 Dr. Munter notes:<\/p>\n

\u201c\u2026any person that knowingly or recklessly provides substantial assistance to another person in violation of a provision of the Securities Act or the Exchange Act, or of any rule or regulation issued thereunder, shall be deemed to be in violation of such provision to the same extent as the person to whom such assistance is provided.\u201d<\/p>\n

Auditor Independence<\/strong><\/p>\n

The Statement addresses how provisions of non-audit services related to crypto assets could affect auditor independence if the firm is later engaged to provide audit services.<\/p>\n

Potential Liability Pursuant to Rule 102(e) of the Commission\u2019s Rules of Practice<\/strong><\/p>\n

This last section of the Statement reminds auditors that if they engage in a single instance of highly unreasonable conduct or repeated instances of unreasonable conduct, both firms and individual auditors can be censured or suspended under SEC Rule of Practice 102(e).\u00a0 Providing services in a situation where a crypto company misrepresents the nature of a report could violate this rule.<\/p>\n

In its conclusion, along with a reminder of the importance of the auditor\u2019s gatekeeper responsibilities, the Statement notes:<\/p>\n

\u201cMaintaining the public\u2019s confidence is a serious responsibility, and it requires accountants to exercise integrity in their actions and activities. This includes ensuring that the accountants\u2019 names or services are not being used to convey a false sense of legitimacy or to mislead investors.\u201d<\/p>\n

As always, your thoughts and comments are welcome.<\/p>\n

\n","protected":false},"excerpt":{"rendered":"

On July 27, 2023, SEC Chief Accountant Paul Munter issued a Statement titled \u201cThe Potential Pitfalls of Purported Crypto \u2018Assurance\u2019 Work.\u201d\u00a0 In the Statement, Dr. Munter notes: \u201cCertain 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 … Continue reading Chief Accountant Warns Auditors about Crypto-Asset \u201cPseudo-Audits\u201d<\/span> →<\/span><\/a><\/p>\n","protected":false},"author":9,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"_wpas_customize_per_network":false},"categories":[242,256],"tags":[],"coauthors":[154],"class_list":["post-2685","post","type-post","status-publish","format-standard","hentry","category-reporting","category-sec-news"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"post_mailing_queue_ids":[],"_links":{"self":[{"href":"https:\/\/seciblog.pli.edu\/index.php\/wp-json\/wp\/v2\/posts\/2685","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/seciblog.pli.edu\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/seciblog.pli.edu\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/seciblog.pli.edu\/index.php\/wp-json\/wp\/v2\/users\/9"}],"replies":[{"embeddable":true,"href":"https:\/\/seciblog.pli.edu\/index.php\/wp-json\/wp\/v2\/comments?post=2685"}],"version-history":[{"count":0,"href":"https:\/\/seciblog.pli.edu\/index.php\/wp-json\/wp\/v2\/posts\/2685\/revisions"}],"wp:attachment":[{"href":"https:\/\/seciblog.pli.edu\/index.php\/wp-json\/wp\/v2\/media?parent=2685"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/seciblog.pli.edu\/index.php\/wp-json\/wp\/v2\/categories?post=2685"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/seciblog.pli.edu\/index.php\/wp-json\/wp\/v2\/tags?post=2685"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/seciblog.pli.edu\/index.php\/wp-json\/wp\/v2\/coauthors?post=2685"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}