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From TFA: > The reserve report, released Wednesday, is a five-page letter from a partner at the South African affiliate of the global accounting firm Mazars. I
by woodruffw 4y ago
From TFA:
> The reserve report, released Wednesday, is a five-page letter from a partner at the South African affiliate of the global accounting firm Mazars. It contained three numbers. The letter wasn’t an audit report, didn’t address the effectiveness of the company’s internal financial-reporting controls, and said Mazars did “not express an opinion or an assurance conclusion,” meaning it wasn’t vouching for the numbers.
> Mazars said it performed its work using “agreed-upon procedures” requested by Binance and that “we make no representation regarding the appropriateness” of the procedures.
This sounds like a Binance paid for a brand name on an empty report, while providers of said brand name (Mazars) are doing everything in their power to distance themselves from factual claims about Binance's solvency. Am I missing something here?
- jsemrau 4y agoNope. That's pretty much the gist of the whole shenanigan. As a former CRO, it's not unheard of but quite uncommon to do this. Because normally it has the opposite effect. It should have been only audited financials. But the Big 4 have failed us spectacularly in recent years.
- siwatanejo 4y ago
- zoklet-enjoyer 4y agohttps://en.m.wikipedia.org/wiki/CRO https://en.m.wikipedia.org/wiki/CRO
- gomoboo 4y agoChief Risk Officer?: https://www.investopedia.com/terms/c/chief-risk-officer-cro.asp https://www.investopedia.com/terms/c/chief-risk-officer-cro....
- JumpCrisscross 4y ago> Am I missing something here? Nope. I can produce a similar report for 60x+ my net worth. Bank account snapshots, wire in wire out. Leveraged assets, debt ignored. This is all marketing aimed at the financially illiterate.
- IG_Semmelweiss 4y agoYes. Agreed upon procedures is a standard non audit report done with a particular target use case in mind. They can be very valuable or complete garbage. It depends on its design and purpose. The disclosures you quote are standard and would form part of any agreed upon procedures engagement. There is no nefariousness at play. However, the better questions are: 1- Does this report result in meaningful assurance and if so, why 2- Why isn't here any audit report
- jacquesm 4y ago> There is no nefariousness at play. By Mazars.
- flybrand 4y agoHow can that claim be made?
- jacquesm 4y agoBy carefully reading their statement and to realize that they have very explicitly not said that they are assuming responsibility for these figures in their role as CAs but that this is merely Binance's opinion expressed on Mazar's letterhead.
- mannykannot 4y ago> Merely Binance's opinion expressed on Mazar's letterhead. This alone is at least a gray area, ethically, and not necessarily in just this case. In this particular case, it has made it possible for Binance’s chief strategy officer, Patrick Hillmann, to say things which he subsequently described as “parroting others’ descriptions of this as an independent audit.” Mazar's response so far: "No comment."
- woodruffw 4y agoIf I squint, I can understand the value of a non-audit-audit in some circumstances. But I don't understand the value of it in this circumstance, except for the value in obscuring one's finances behind a "serious" auditor's letterhead. Put another way: the context is anxious investors. Is this intended to assuage them, or is it intended to dupe them?
- raverbashing 4y agoThat's pretty much it They're asking the auditors to tell how many sweets you have in a box, but you can only shake the box and listen to what sound it makes. And not actually do any form of due diligence
- flybrand 4y agoChocolate covered turds look like sweets until it’s too late.
- dhruval 4y agoFormer auditor here: 1. That is standard wording for the report of "agreed upon procedures". This is not an audit it just means they only did a certain set of procedures rather than an audit. 2. Audits aren't really able to detect all fraud, especially if the management is sophisticated. But if the fraud results in obvious material discrepancies then the audit would catch it and the auditor would resign (unless they are corrupt in which case you end up with Enron where a Big 5 auditor was complicit, so now we have the Big 4). 3. In the Binance case, the obvious weird thing is they only did these very limited agreed upon procedures on 'Bitcoin', but other crypto currencies they claim to hold were not verified at the same time. Also their other liabilities are not verified. (As some examples: they could have some non-BTC liabilities to offset the Bitcoin or CZ moved some personal bitcoin to wallets or converted some other holdings, all sorts of possibilities. Would be hard to hide from a full audit but in this case very easy to hide. )
- moneywoes 4y agoCurious did you switch from auditing to something else?
- throwawaymaths 4y agoDon't forget the big four signed off on evergrande and other Chinese real estate and it seems like there will be no consequences (we can't have the big zero)
- cm2187 4y agoHas there been an accounting fraud with Evergrande? Being overleveraged isn’t fraud.
- throwawaymaths 4y agoIt's fraud when you tell investors incorrect things in prospectuses, for example. These things are required to be signed off by auditors to participate in us stock exchanges
- prepend 4y agoIsn’t it telling that this work wasn’t done by the “big four?” Given that the Big Four like money and are ostensibly the biggest and oldest and with the best reputation. Any perceived shaky but actually strong firm would come out gangbusters with “Old Accounting firm stakes its reputation that we aren’t full of shit.” After the death/execution/seppuku of Anderson after Enron, the remaining four seem extra conservative these days so they would likely only take on a job if it was reputable. Even if it means hundreds of millions of dollars in fees. This is an example where old fuddy duddy finance should help me as a consumer.
- patentatt 4y agoAlso, same firm that Trump worked with. I see a potential pattern here.
- poutrathor 4y agoMazars is 5th in Europe, 24 400 employees and it makes ~2 bilions in turnover. this above comment is not bringing much value to the discussion I think.
- AdamN 4y agoEver since the Trump stuff, I don't think Mazar's gets alot of trust anymore: https://www.nytimes.com/2022/02/14/nyregion/mazars-trump-organization-financial-statements.html https://www.nytimes.com/2022/02/14/nyregion/mazars-trump-org...
- poutrathor 4y agoFair point but I am pretty sure so many accounting firms messed up quite often. Without slowing their business much. I remember this one for example that was probably missed by most people. https://www.bbc.com/news/business-58671915 https://www.bbc.com/news/business-58671915 Trump was a loaded client and any firm doing business with any politicians should be extra-careful
- 4y ago