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Hester Pierce strikes back against SEC crypto warning to accountants

Hester Pierce, commissioner of the United States Securities and Exchange argued that full transparency should not come at the cost of compromising good-faith efforts.

Hester Pierce, commissioner of the United States Securities and Exchange (SEC), has raised concerns about the watchdog's recent statement advising accounting firms against taking on non-audit work for crypto firms.

In a July 28 tweet, Pierce challenged the recent statement made by the SEC's chief accountant Paul Munter. The statement suggested that accounting firms adopt an all-or-nothing approach to engagements with crypto firms, which Pierce believes could result in crypto firms refraining from making good-faith efforts due to fear.

While Pierce noted that crypto firms and accountants should ensure transparency regarding proof of reserves, specifying what is and isn't acceptable, she questioned why accounting firms should be cautious of providing assurance work to crypto firms. 

“Why would we want to discourage good-faith efforts to provide more transparency?” Pierce stated in a tweet.

Munter stated that partial engagements 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, noting:

Certain crypto asset trading platforms, with others in the crypto industry, have marketed to investors their retention of third parties, sometimes accounting firms, to perform some sort of review of certain parts of their business, often presented as a purported “audit."

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 consider making a "noisy withdrawal, disassociating itself from the client, including by way of its own public statements," or report the firm to the SEC.

Related: SEC appeal could amplify Ripple win, says Ripple Labs legal chief

Mike Shaub, an auditing and accounting ethics professor at Texas A&M University, responded to the statement in a July 29 tweet, mentioning that auditors are obligated by confidentiality, making it challenging to make public statements like Munter suggested.

Shaub also highlighted the issue of some accounting firms aligning themselves with cryptocurrency expertise to boost their reputation but become unresponsive when problems surface.

Magazine: SEC reviews Ripple ruling, US bill seeks control over DeFi, and more: Hodler’s Digest, July 16-22



via cointelgraph.com

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