Hester Pierce has questioned the recent statement made by the SEC's chief accountant, who advised accounting firms to be cautious of engaging in non-audit work for crypto firms due to potential legal liabilities.
Munter stated that such practise might result in crypto firms selectively choosing only certain aspects of the business to show accounting firms and then presenting that information as a full audit to clients. He believes that work beyond a full audit's scope will lack transparency 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 stated According to Munter, if an accounting firm discovers that a client is making misleading statements about its non-audit work to the public, it should take a firm stance and treat it seriously. He noted:
“As best practise, the accounting firm should consider making a noisy withdrawal, disassociating itself from the client, including by way of its own public statements, or, if that is not sufficient, informing the Commission."Mike Shaub, an auditing and accounting ethics professor at Texas A & M university, commented on the statement in a July 29 tweet, stating that auditors are bound by confidentiality, which makes it difficult to make public statements like Munter suggested.
The recent trend has been to take credit as being cutting edge to raise the profile, then to be low profile when things go south. That may have triggered SEC interest as well. If the auditor is silent in these cases, beware. 2/2Shaub also highlighted the issue of some accounting firms aligning themselves with cryptocurrency expertise to boost their reputation but become unresponsive when problems surface.
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