The U.S. Securities and Exchange Commission (SEC)’S commissioner, Hester Pierce, claimed total transparency should not compromise good-faith initiatives.
Concerns regarding the agency’s recent statements instructing accounting companies not to take on non-audit work for crypto organizations have been raised by Hester.
Pierce Encourages Crypto Accounts to Enhance Transparency
Via a tweet on July 28, Pierce criticized the recent statement by Paul Munter, SEC’s chief accountant, suggesting the need for accounting firms to deal with crypto companies using an all-or-nothing approach. According to Pierce, the move may result in crypto organizations avoiding making good-faith efforts to maintain transparency.
Pierce claimed that crypto accountants and organizations need to enhance transparency concerning proof of service by stipulating what is acceptable and what is not. However, she queried why accounting companies need to be vigilant in offering assurance work to crypto companies.
Pierce Faults SEC’s Statement, Warning Discouraging Good-Faith Efforts Would Erode Transparency
Via a tweet, she asked how discouraging good-faith efforts would result in enhanced transparency. She claimed that partial agreements might lead to crypto organizations selectively picking only specific elements of the business to show accounting companies and later presenting the data as a complete audit to clients.
Munter is confident that work surpassing the scope of a complete audit will not have transparency. He noted that some crypto asset trading platforms, as well as others in the crypto industry, have marketed their retention of third parties and some accounting firms to investors. The marketing seeks to execute some kind of evaluation of specific aspects of their business, primarily presented in the form of a supposed ‘audit.’
SEC’s Executive Encourages Accounting Firms to Make Noisy Withdrawal for Deceptive Crypto Firms
Munter revealed that in case an accounting company establishes that a customer is making deceptive statements concerning its non-audit work, it needs to take a strong position and take into account making a ‘noisy withdrawal that involves separating from the client, which includes employing its public statements.’ Further, the firm may be reported to the Securities and Exchange Commission.
Accounting Ethics Scholar Challenges SEC’s Advisory for Accounting Firms Report Deceptive Crypto Firms
An auditing and accounting ethics professor at Texas A&M University, Mike Shaub, provided a response via a July 29 tweet by claiming that auditors are obligated by confidentiality.
As such, it becomes difficult to make public statements, as suggested by Munter. Further, Shaub mentioned that some accounting companies collaborate with cryptocurrency experts to enhance their reputation but fail to respond when challenges come up.
Acting as the whistleblower would compromise the accountancy contracts with other crypto projects. Shaub urges professional conduct for accounting firms offering services in crypto projects.
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