SEC chief accountant warns accountants about liabilities when auditing crypto firms

cointelegraph.com:

Paul Munter, chief accountant of the United States Securities Exchange Commission (SEC), has released a statement warning accounting firms of their obligations to the agency when working with crypto firms. Allowing their finding to be misrepresented could have serious consequences, he said.   

Crypto firms may engage accountants to “perform some sort of review of certain parts of their business, often presented as a purported ‘audit’” and falsely present the work as being comparable to a financial statement audit, Munter wrote. Doing so is not only misleading, butit can have legal liability.

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Accounting firms have a legal obligation under the Securities Exchange Act of 1934 to look for illegal activities and report them to the SEC, Munter continued. “Material misstatement” by accountants or their clients could violate both the Securities Exchange Act and the Securities Act of 1933, resulting in censure or suspension of the firm. Those provisions can also be applied to individuals.

Munter advised accounting firms to consider these issues during client onboarding and to consider contractual prohibitions on certain language. In response to misleading statements, the position of the SEC Office of the Chief Accountant is:

The accounting firm’s independence is vital, Munter continued, and even the appearance of a mutual interest or conflict of interest in its public statements could be enough to have the firm suspended from “the privilege of appearing or practicing before the Commission.”

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