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The U.S. Securities and Exchange Commission's (SEC) latest advisory has stirred a debate within its own ranks. The center of the controversy is the suggestion that accounting firms refrain from engaging in non-audit tasks for cryptocurrency enterprises. Commissioner Hester Pierce, a well-known figure within the SEC, has publicly voiced her disquiet over this.
Commissioner Pierce turned to social media on July 28 to question this stance spearheaded by SEC's Chief Accountant, Paul Munter. The key concern, according to her, is that this all-or-nothing proposition could lead crypto ventures to recoil from their commitment to transparency.
Pierce emphasized that while it's crucial for crypto businesses and accountants to provide clear proof of reserves, she pondered the need for such reluctance from accountants to undertake assurance tasks for crypto firms.
Munter, on the other hand, posits that half-hearted engagements could pave the way for crypto firms to exhibit only certain facets of their operations to accounting firms. The worry is that this fragmented information may then be presented to clients as a comprehensive audit. He added that tasks beyond the purview of a complete audit could lack transparency, which could be detrimental to investors.
He recommends that f an accounting firm discovers its client is spinning tales about non-audit tasks, a "noisy withdrawal" may be necessary. The firm could publicly distance itself from the client or even report the incident to the SEC.
Mike Shaub, a Texas A&M University professor specializing in auditing and accounting ethics, responded to Munter's recommendation, pointing out that the notion of public statements poses a significant challenge due to the confidentiality obligations of auditors.
He further underscored the predicament of accounting firms that claim cryptocurrency expertise to augment their reputation, yet turn a deaf ear when issues emerge, highlighting an ongoing debate within the sector on transparency and ethical considerations.
