Sens. Warren, Wyden question quality of auditors’ oversight in light of FTX debacle

cointelegraph.com:

Two United States senators have taken their questions about the performance of the accounting firms active in the crypto space to a higher power – the Public Company Accounting Oversight Board (PCAOB). Failure to uncover alleged criminality and poor recordkeeping at FTX has sullied the image of the PCAOB and the accounting profession, the senators said.

In a letter addressed to PCAOB chair Erica Williams and dated Jan. 25, Democratic Sens. Elizabeth Warren and Ron Wyden pointed out claims former FTX CEO Sam Bankman-Fried made about passing audits by large accounting firms Armanino and Prager Metis. Current FTX CEO John Ray told a bankruptcy court that he had “substantial concerns as to the information presented in these audited financial statements.”

In addition, the senators questioned the firms’ impartiality, saying they acted as “crypto industry cheerleaders.”

Just sent from @SenWarren to @PCAOB_News: "We write regarding recent turmoil in the cryptocurrency industry following the collapse ofcrypto platform FTX in Nov 2022 and the role that auditors may have played in misleading the public..." https://t.co/erbblBns9K pic.twitter.com/nDjenQ9awW

Warren and Wyden mentioned Williams’ statement that PCAOB registered firms are only required to meet the board’s standards “when they’re auditing a public issuer or broker dealer under our jurisdiction, not for any other clients” and pointed out PCAOB rules that seem to contradict Williams’ statement.

The senators also criticize proof of reserve reports. They wrote:

The reason for their discussion of a process that is explicitly not subject to PCAOB oversight became clear in the 12 questions posed by the letter. They asked in their first question:

Warren and Wyden went on to seek