• Paul Munter, Chief Accountant of the United States Securities and Exchange Commission (SEC), has released a statement warning accounting firms of their obligations to the agency when working with crypto firms.
• Accounting firms have a legal obligation under the Securities Exchange Act of 1934 to look for illegal activities and report them to the SEC.
• The SEC Office of the Chief Accountant advises accounting firms to consider contractual prohibitions on certain language and take action in response to misleading statements.
SEC Chief Accountant Warns Accountants About Liabilities When Auditing Crypto Firms
Paul Munter, chief accountant of the United States Securities and Exchange Commission (SEC), has released a statement warning accounting firms of their obligations to the agency when working with crypto firms. Making or allowing misleading statements can have serious consequences for accounting firms and individual accountants.
Legal Obligations Under The Securities Exchange Act Of 1934
Accounting firms have a legal obligation under the Securities Exchange Act of 1934 to look for illegal activities and report them to the SEC. 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.
Best Practices For Client Onboarding
Munter advised accounting firms to consider these issues during client onboarding and to consider contractual prohibitions on certain language. In response to misleading statements, he suggests “as best practice” that an accounting firm should make a noisy withdrawal, disassociate itself from its client, including by way of its own public statements, or inform the Commission if necessary.
Importance Of Independence For Accounting Firms
The independence of an accounting firm is vital – even an appearance of mutual interest or conflict of interest in its public statements could result in suspension from “the privilege of appearing or practicing before the Commission” for an accountant..
Listen To Our Latest Podcast With Paul Munter
Want more insights into hot topics? Listen to our latest podcast with guest speaker SEC Chief Accountant Paul Munter for more information about auditing practices and liabilities related to crypto companies!