Paul Munter, chief accountant, United States Securities and Exchange Commission (SEC), has informed accounting firms about their working commitment to crypto firms. Munter stated about how wrong representation of their findings could result in implications, as stated by Cointelegraph.
According to Cointelegraph, Munter highlighted that crypto firms can ask accountants to “perform some sort of review of certain parts of their business, often presented as a purported ‘audit.”’ From what it’s understood, these developments can result in legal actions.
Based on Cointelegraph’s data, accounting firms are accountable under Securities Exchange Act of 1934, which requires them to report illegal operations to SEC. “Material misstatement,” on behalf of accountants or their clients, could contradict both Securities Exchange Act and Securities Act of 1933. These provisions are considered applicable for individual accounting entities as well. Reportedly, Munter emphasised on taking account of these concerns during client onboarding, along with particular language-based contractual limitations.
“As best practice, 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,” Munter stated.
Moreover, Cointelegraph noted that Munter spoke on the point of SEC lacking resources to examine every financial statement, and it “relies heavily on accountants to assure corporate compliance with federal securities law requirements.” In 2022, SEC unveiled its Staff Accounting Bulletin 121.
(With insights from Cointelegraph)