According to a report published by the Financial Times, regulators in the United Kingdom (United Kingdom) have discovered flaws in the audits conducted by the cryptocurrency-friendly bank Revolut. According to a report published in July by the Financial Reporting Council (FRC), an unnamed company’s audit had several flaws that needed to be fixed. The Financial Reporting Committee (FRC) mentioned that “the risk of an undetected material misstatement was at an unacceptably high level.” On the other hand, people familiar with the situation have revealed to Financial Times (FT) that the unnamed entity is in fact Revolut.
Audit services for Revolut were provided by BDO, which is recognized as one of the leading accounting firms in the world. Additionally, the regulators brought attention to the shortcomings in BDO’s testing of the payment procedures of crypto-friendly banks.
A person close to the matter told FT, “The auditors are being significantly more challenging now because they’re getting beaten up by their regulators.”
Furthermore, the individual added that the stringent approach taken by BDO could result in delays in the filing of financial reports for Revolut subsidiaries. Both Revolut Group Holdings Ltd., the parent company of the group, and Revolut Ltd. are required to submit their yearly financial reports for the year 2021 by the end of September. In addition, the accounts for Revolut NewCo UK have been delinquent since the 10th of June. It is anticipated that the filings from Revolut Travel Ltd. and Revolut FIC Ltd. will be submitted by the month’s end as well. Despite the fact that filing delays are rarely punished, directors of firms could be prosecuted for their roles in the delay.
The position of Revolut as Europe’s second most valuable fintech company is one that it currently holds. During the $800 million funding round, the firm had a valuation of $33 billion.
In the meantime, BDO was compensated to the tune of 650,000 pounds for auditing the financial statements of the cryptocurrency-friendly bank. The FRC criticized the accounting firm for having poor quality control during audit.
The regulators are increasing the amount of pressure they put on auditors to reject requests from companies to sign off on accounting in a timely company if management has not provided the necessary information.
BDO in the sights of pro-crypto companies?
Recently, BDO has been in the crypto industry’s spotlight due to the fact that its Italian branch, BDO Italia, has formed a partnership with Tether. In order to complete its quarterly attestations, the firm will collaborate with the stablecoin issuer. Now, the crypto community has been critical of Tether for a long time because the company does not have a full and complete audit of its reserves. The crypto world as a whole is of the opinion that the firm does not have sufficient backing.
Tether has been promising to perform a comprehensive audit of its reserves for almost five years now, but this promise has yet to be fulfilled. Tether’s Chief Technology Officer, Paolo Ardoino, stated not long ago that an audit will not take place for several more months.
It remains to be seen how BDO Italia will perform for Tether in light of the bad reputation that it has garnered from the UK regulators. Given the strength and popularity of the USDT coin, a significantly larger portion of the crypto community will be exposed to the results of Tether’s audit.