TITLE:
FTX—The Plausbility of an Unmodified Audit Opinion on an Organization That Lacks Internal Control; A Deep Dive into the Standards
AUTHORS:
Nicole Wald
KEYWORDS:
FTX, Cryptocurrency, Internal Control, Material Weakness
JOURNAL NAME:
Open Journal of Accounting,
Vol.12 No.2,
April
30,
2023
ABSTRACT: FTX Group
was plagued with material related party transactions as well as an
“unprecedented” lack of internal control. Yet, despite these issues, two of the
four FTX “Silos” were given unmodified audit opinions. The purpose of this paper is not to rehash
what went wrong, how and where. Rather, this paper calls into question the
ability for a public accounting firm to issue an unmodified opinion on the
financial statements of FTX. I will explore the relevant auditing standards and
guidance provided to auditors to determine the appropriateness of issuing an
unmodified opinion. Ultimately, I determine that a Disclaimer of Opinion on the
Financial Statements is the only appropriate report to issue when an entity has
pervasive and material related party transactions and lacks internal control.