When it comes to auditing standards, there are certain requirements that auditors must adhere to in order to ensure a thorough and accurate audit. These standards dictate that auditors must have a deep understanding of the entity being audited, its environment, and the competency and independence required to perform the audit effectively. Additionally, auditors must be able to adequately staff the audit in order to meet the necessary requirements.
These standards apply across the board, whether the audit client is a small local thrift shop or a large cryptocurrency exchange with a related party trading firm. Despite the size or complexity of the client, auditors must follow the same set of standards to uphold the integrity of the audit process.
Prager Metis, a New York-based firm, made headlines when it ventured into the world of cryptocurrency auditing. The firm boldly established a metaverse headquarters in Decentraland and took on FTX as a client, positioning itself as a forward-thinking accounting firm ready to tackle the challenges of the future.
However, the Securities and Exchange Commission (SEC) has since charged Prager Metis with lacking the basic understanding and competency required to audit the cryptocurrency industry. This serves as a stark reminder of the importance of adhering to auditing standards and ensuring that auditors are adequately prepared to take on the challenges of auditing in a rapidly evolving industry.
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