US Securities and Exchange Commission commissioner Hester Pierce said that honesty and openness should not be traded for dishonesty.
U.S. Securities and Exchange Commission (SEC) Commissioner Hester Pierce has voiced reservations about the SEC’s recent statement discouraging accountants from doing non-audit work for cryptocurrency companies.
On July 28, Pierce tweeted his disagreement with SEC chief accountant Paul Munter’s previous remark, in which Munter suggested that accounting firms take an all-or-nothing strategy in dealing with crypto companies. Pierce worries that this would discourage honest crypto companies from taking steps towards more transparency.
While Pierce agreed that crypto businesses and accountants should be clear about what constitutes acceptable evidence of reserves, she questioned why accounting firms should be wary of doing assurance work for crypto firms.
Munter stated that if crypto businesses were allowed to do partial engagements, they may choose to only reveal accounting firms’ particular areas of the company, and then portray this information as a comprehensive audit to customers.
Investors will be left in the dark, he says, if work is done that goes beyond the scope of a comprehensive audit.
key crypto asset trading platforms, along with others in the crypto sector, have advertised to investors that they have hired outside parties (typically accounting firms) to conduct a review of key aspects of their company, frequently framed as an “audit.”
A “noisy withdrawal, disassociating itself from the client” in the form of a public statement or a report to the SEC is one option that Munter suggests an accounting firm take if it learns that a customer is making false claims regarding the firm’s non-audit work.
Prof. Mike Shaub of Texas A&M University’s Department of Auditing and Accounting Ethics tweeted in response to Munter on July 29 that public remarks like Munter’s are difficult since auditors are bound by confidentiality.
Shaub also brought up the dilemma of accounting companies associating themselves with crypto knowledge to improve their brand but then not responding to issues that develop in the sector.
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