Auditing standards require at a minimum that auditors understand the entity and its environment, that it has the competency and independence to perform the audit, and that it can’t effectively staff the audit, among other things. These standards apply whether the audit client is a first-time client, a small local thrift shop, or a multibillion-dollar cryptocurrency exchange with a related party trading firm.
Prager Metis, which is based in New York, rushed into the latter space with abandon. The firm was the first to announce a metaverse headquarters in Decentraland. The firm took on FTX as a client. It apparently wanted to be seen as the accounting firm of the future. And yet, as the SEC has charged, it lacked the basic understanding and competency to audit the industry.
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