Senators Elizabeth Warren and Ron Wyden have raised concerns about the authority of the Public Company Accounting Oversight Commission (PCAOB) over the collapse of the FTX cryptocurrency exchange.
Democrats Elizabeth Warren of Massachusetts and Ron Wyden of Oregon sent a letter to the PCAOB demanding that the agency enforce stricter standards for audit firms. Senators are concerned that auditors may use dubious practices when dealing with cryptocurrency projects.
The PCAOB oversees the audit of public companies and brokers and dealers registered with the US Securities and Exchange Commission (SEC). Therefore, the agency was asked the question: is it going to use its powers to evaluate the audit reports of any cryptocurrency organization acting as a broker-dealer, even if the company was not registered with the SEC?
Warren and Widen noted that some of the major accounting firms that worked with FTX found nothing suspicious on the exchange, such as a lack of accounting and corporate controls. The lawmakers have also criticized the reserve checks carried out by crypto companies, saying they do not meet the requirements. This is partly because these checks are not controlled by the PCAOB. Senators expect to receive a response from the agency by February 8.
“When auditors registered with the PCAOB conduct fictitious audits, including for firms that may be outside the jurisdiction of the PCAOB, they undermine the credibility of not only themselves, but also the agency itself. After all, when making investment decisions, the public relies on their reports,” the senators said in a letter.
In December, the SEC also announced the need to increase oversight of the auditors of cryptocurrency companies, since the Mazars auditor previously removed links to published reports on the reserve adequacy of the Binance exchange.
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