(Finance) – The National Commission for Companies and the Stock Exchange (Consob) invited the auditing firms and statutory auditors to carry out adequate risk assessment in the acquisition and maintenance of statutory audit assignments relating to companies operating in the sector of crypto assets.
The Authority’s call to attention follows the recent scandals that have affected the crypto-asset sector, which have highlighted the high risks associated with these activities. These risks require “particular attention on the part of auditors, taking into account the potential professional and legal liabilities” that derive from the acceptance and execution of assignments on subjects of this sector.
Consob does not cite specific cases, but last week Mazars – global accounting and consulting giant – ha suspended all activities with its clients operating in the cryptocurrency sector. The decision to sever ties with Binance, KuCoin, and Crypto.com came amid indications that markets have not been reassured by the “proof-of-reserves” reports it had released thus far. The company also said it is concerned about media attention to the documents and how these reports are understood by the public.
The announcement was a major blow to an industry that is grappling with a collapse of confidencein the wake of collapse of cryptocurrency exchange FTXwith founder and former CEO Sam Bankman-Fried having been accused of fraud and money laundering.
These concerns have also led to net outflows of about $6 billion in 72 hours last week from the giant Binance. A Reuters investigation underlined how i company financial statements are a “black box”, as Binance refuses to disclose where Binance.com is based, it does not disclose basic financial information such as revenue, profit and cash reserves; furthermore, the company has its own cryptocurrency, but does not disclose what role it plays in its balance sheet, and lends money to clients against their crypto assets and allows them to trade on margin, with borrowed funds.
In its call for attention, Consob stated that the peculiarities of the crypto-asset sector, with the limits it presents in terms of regulation and transparency, the interconnections that characterize the subjects who operate in it for various reasons, as well as the connected effects to the default events of leading operators in the sector, “require auditing firms and statutory auditors to raise professional skepticism to the highest level“.
Furthermore, in consideration of thehigh risk of money laundering connected to the activities and services concerning crypto-assets, the auditing firms and the statutory auditors are invited to pay particular attention in fulfilling the obligations to determine the money laundering risk of the statutory audit, assurance or other related tasks provided by customers operating in this sector.