The audit group Mazars has come into headlines after stopping the ‘proof of reserves’ for its clients. This also involves bigshot names such as Binance, the biggest crypto exchange. They stated that they are taking preventive measures to assure the public and not get misunderstood by them. However, several crypto companies, including Binance appointed accounting firms to execute a ‘proof of reserves’ audit and form the report. This is the step taken by several crypto companies in difficult times to show their clients that they are enough assets to provide complete support for customer deposits.
The other companies with whom Mazars has stopped its operations are KuCoin and Crypto.com. Mazars said they are stopping their operations regarding the provision of proof because of the nature of understanding the public has for such reports. Such steps taken by auditors have been a sigh of relief for the investors. However, these kinds of reports don’t provide similar qualitative or quantitative information as conventional auditing and come with less reliability.
The report formation and building of the ‘proof of reserves’ include that the company determines the reporting procedures. However, this doesn’t specify whether such methods are appropriate for given results or scenarios. Contrary to the conventional financial reports of the companies, the auditor doesn’t offer any opinion or assurance regarding the numbers presented in the report data.
Mazars mentioned that proof of reserver reports provides information regarding minimal findings. This specifies the results as per the actions that occurred at a previous time.
Similarly, Binance’s disclosure says they have $60 billion in their assets. However, the report doesn’t show the liabilities that the company owns. The company representatives said in an interview that the assets support all the deposits done by the clients. Moreover, its capital structure has no debt. However, the report only provided partial information, and the company representatives refused to mention much more.
