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Recent Editions
Risk Channel
North America
U.S. regulators have appointed two separate independent compliance monitors to ensure cryptocurrency exchange Binance meets the requirements set forth in its settlements over money-laundering and sanctions violations. The U.S. Justice Department has chosen Frances McLeod, a founding partner at forensic consulting firm Forensic Risk Alliance, as a monitor for three years, while the Treasury Department’s Financial Crimes Enforcement Network has selected Sharon Cohen Levin, a partner at law firm Sullivan & Cromwell, to serve as its monitor for five years. A Binance spokesperson said the company is looking forward to working with the monitors and has “staffed a dedicated monitor liaison office to ensure seamless and efficient operations.”
Full IssueRisk Channel
UK/Europe
A study by the Audit Reform Lab, a research centre at the University of Sheffield, has found that audit firms failed to issue warnings before three out of four major UK corporate collapses since 2010. The research looked at 250 stock market listed companies liquidated between 2010 and 2022 and found that auditors failed to include a material uncertainty notice in about 75% of cases. EY warned of going concern risks for just 20% of companies that subsequently collapsed. PwC provided warnings in 23% of cases, Deloitte 36% and KPMG 38%. Smaller auditors performed even worse, delivering warnings in only 17% of collapses. Professor Adam Leaver, the Audit Reform Lab director, said auditors are failing to show independent judgement or professional scepticism, with the sector “plagued by poor standards, a toothless regulator, conflicts of interests and weak sanctions for malpractice.” The Audit Reform Lab said penalties issued by the Financial Reporting Council were too small to “materially affect partner pay - providing an insufficient deterrent and enabling firms to continue to be rewarded for failure.” The report added: “Until the culture of audit is reformed and a new and more effective regulator is in place, partners at audit firms will continue to reap huge financial rewards, despite continued audit failures that harm business confidence and our economy more widely.”
Full Issue