The U.S. Public Company Accounting Oversight Board (PCAOB) recently released a warning saying that crypto proof-of-reserve audits, which is used by some companies, have limitations and so investors should be careful when dealing with those companies.
US SEC Warns
The United States’ official money police recently said people should be careful about trusting some reports by certain auditors that say a cryptocurrency company such as an exchange or virtual coin maker is doing the right thing with the money. The government money police think investors shouldn’t take these reports too seriously because they might not be accurate.
The PCAOB is in charge of ensuring that crypto asset reports are accurate, but they do not think these reports offer any kind of guarantee. These reports only verify the existence of crypto assets but don’t say anything about if they were used or borrowed. It might give people the wrong idea that there is enough or too much money present when really it’s impossible to tell. The PCAOB warned us about this and said:
“Contrary to what some people may think, POR Reports aren’t any better or stronger than an audit. Plus, there isn’t a common way for companies that do POR engagements.”
The PCAOB (a U.S accounting entity) is not happy with certain processes called POR (Profit and Loss Report). In December 2022, an official from the US Securities and Exchange Commission warned people to be careful when using POR. A crypto analyst named Martin Hiesboeck even said that the report might be wrong or misleading. The U.S accountancy body agrees and suggest that investors should take extra precautions when going through any POR report.
The people in charge of making sure everything is okay with businesses related to cryptocurrency have said that investors should use extreme caution when using proof-of-reserve audits as they are not always reliable. Do you think these reports give enough assurance to investors or can’t they be trusted? Share your ideas about this topic by leaving a comment below!
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