US Accounting Watchdog Issues Warning on Crypto Proof-of-Reserve Audits: Investors Urged to Exercise Caution
According to a recent warning by the U.S. Public Company Accounting Oversight Board , crypto proof-of-reserve audits have limitations, and the board believes that investors should exercise caution when dealing with companies using POR audits.The U.S. accounting watchdog recently issued anabout auditors using proof-of-reserve techniques to audit specific crypto companies, such as exchanges and stablecoin issuers.
The reports are not within the PCAOB’s oversight authority, and the watchdog does not consider them audits, nor does it believe that POR reports offer any meaningful assurance. The PCAOB insists that these purported audits claim to provide crypto asset verification, but they are limited, and some reports do not address the crypto entity’s liabilities.
Despite any representations to the contrary, POR Reports are not equivalent or more rigorous than an audit, and they are not conducted in accordance with PCAOB auditing standards. In addition, there is a lack of uniformity regarding service providers that perform POR engagements. The PCAOB warning is not the only criticism of certain POR processes. In December 2022, a U.S. Securities and Exchange Commission official