Paul Munter, Chief Accountant of the United States Securities Exchange Commission (SEC), has issued a statement cautioning accounting firms of their duties towards the agency when providing services to crypto companies. He communicated that if accountants enable any misstatement of their activities, it can result in legal repercussions. It is possible that crypto businesses involve auditors for carrying out “some kind of review” of certain parts of their operations, and then claiming that there has been a financial statement audit. This not only plays as a deceit, but it can expose the accounting firm and its clients to penalties.
Accounting firms are under legal obligation to spot any illegal activities as per the Securities Exchange Act of 1934 and report them to the SEC. Munter addressed that such misstatements may lead to censure or suspension of firms or individuals as per Securities Exchange Act and the Securities Act of 1933 respectively.
Though Munter pointed out the accounting firm have to adhere to certain prohibitions during client acquisition, yet, if any misstatement surfaces, the SEC’s Office of the Chief Accountant suggested the accounting firm must make a withdrawal, easily dissociate itself if possible or look into informing the Commission.
Following the said appeals, it became evident how critical the accounting firm’s autonomy is, and even possible inclination of identical curiosity or discord of interest in disclosures may lead towards prevention of appearing or practice before the Commission.
Highlighting the agency’s inability to manage finances statements of all companies on its end, Paul Munter stated that the SEC relies largely on the work of auditors to ensure companies remain compliant with federal laws. Notably, his department revealed the Staff Accounting Bulletin 121 in the subsequent year.
