Commissioner of the United States Securities and Exchange (SEC), Hester Pierce, recently vented her concerns, reacting against SEC’s warning to accounting firms, particularly related to non-audit work for crypto clients. In the face of problems arising, she argued, the unaffected procedure should be to distance from them glaringly.
The SEC’s chief accountant, Paul Munter, had issued a statement cautioning accounting firms to steer clear from dealing with crypto platforms unless it’s for a comprehensive financial audit. Munter’s stance shapes from the belief that crypto firms might selectively present only certain sections of the business as a complete financial audit to deceivingly allure accounting firms and clients. However, Pierce countered this opinion, stating that this attempt to enhance transparency might instead inhibit honest efforts from crypto platforms.
Munter maintained that efforts beyond a full audit’s extent would compromise the transparency needed for investors. “Non-audit arrangements are neither as rigorous nor as comprehensive as a financial statement audit, and may not provide any reasonable assurance to investors,” Munter noted. He also suggested that when an accounting firm discovers a misleading public statement about its non-audit work from a client, a bold stance needs to be taken. This could either take the form of a ‘noisy withdrawal’, a public disassociation, or even reporting to the Commission.
The reaction from the crypto community has been primarily concerned with Munter’s suggestion that auditors should disregard their relationship confidentiality and make public statements about their clients. Mike Shaub, an auditing and accounting ethics professor at Texas A & M University, argued that some accounting firms boast their alignment with crypto expertise to gloat their reputation, only to turn their backs when problems arise.
Yet, this controversy seems to be a push in the line of fire between transparency for investors and protection for crypto platforms striving for good-faith efforts. It puts into question the procedures and standards in place for crypto accounting and the responsibility of the auditors enmeshed in this digital landscape.
Source: Cointelegraph
