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This paper aims to help auditors manage the risk of Foreign Corrupt Practices Act (“FCPA”) violations of the companies that they audit, particularly those with operations in Latin America.

First, the paper describes the relevant provisions of the FCPA. Second, it identifies the common schemes and transactions associated with heightened risk of FCPA liability in Latin America and provides recommendations to minimize this risk. Third, it discusses the responsibilities of auditors under U.S. securities laws and regulations with respect to the FCPA violations of their clients. Finally, it describes the sanctions that auditors could face if they fail to fulfill their responsibilities regarding these FCPA violations. The paper is based on data collected from various documents including laws, cases, accounting and auditing standards, litigation releases, press releases, deferred prosecution agreements, and enforcement actions.

Auditors have a responsibility under Section 10A(a) of the Exchange Act to design procedures that provide reasonable assurances of detecting the FCPA violations of their clients, which are illegal acts with direct and material effects on the financial statements. In addition, auditors have a responsibility under Section 10A(b) of the Exchange Act to report the violations of the FCPA that they detect during the audit to the appropriate level of management. If management does not take the necessary remedial steps, auditors must report FCPA violations to the U.S. Securities and Exchange Commission. In order to reduce their FCPA-related liability and fulfill their responsibilities under U.S. securities laws and accounting standards, auditors should closely scrutinize transactions with a high risk of FCPA liability. An analysis of FCPA cases occurring in Latin America reveals six categories of transactions with heightened FCPA risk.

While there is much literature regarding a company’s compliance with the FCPA, there has not been much literature about the auditor’s responsibilities with respect to the FCPA violations of their clients. This paper attempts to start bridging this gap by providing guidance to auditors regarding their responsibilities to detect and report FCPA violations.

This chapter examines the current state of crypto exchange-traded funds (ETFs). It focuses on issues preventing wider implementation and specific products. ETFs have become a popular investment vehicle that investors use to help achieve their long-term goals. A recurring theme is that regulators protect individual investors from direct exposure to cryptocurrency, which many view as highly speculative investments. Pressure from institutions and investors for a bitcoin-based ETF made progress in 2021 when Proshares, an ETF specialized investment company, debuted the first-ever bitcoin futures ETF in the United States. This event is the first-time investors could buy a fund on the New York Stock Exchange that tracks derivative futures contracts of bitcoin. This occurrence pushed this digital asset’s spot price to all-time highs, serving as a breakthrough in cryptocurrency history.

This chapter discusses the current landscape for digital asset investing and the many operational risks facing cryptocurrency investors. It also discusses the ongoing progress in the institutionalization of digital asset investment and the risks inherent when investing in cryptocurrencies and blockchain opportunities. Investors considering investing in a public or private fund that invests in digital assets must be aware of the operational risks that may directly impact their investments, including risks from portfolio concentration, illiquidity, hacking, digital asset custody, and digital asset valuations. Operational due diligence reviews of funds and fund managers are critical in assessing operational risks for digital asset investment.

The current security trade settlement life cycle presents several inefficiencies derived from intermediaries involved in the transaction between buyers and sellers. This chapter examines distributed ledger technology (DLT), the underlying technology of all blockchain applications, including trade settlements. It also reviews the implications of using blockchain in trade settlements for cryptoassets. Emerging blockchain technology provides investors, exchanges, regulators, and countless potential intermediaries with the most up-to-date technology with the highest efficiency, transparency, credibility, and automation enabled by smart contracts. Smart contracts allow an ecosystem to manage the process of trade settlements starting from execution to clearing and then settlement. These contracts reduce reconciliation and recordkeeping costs and streamline repetitive processes present in today’s trade settlement system. The chapter highlights the benefits of implementing DLT in financial markets globally in all trading aspects, including cryptoassets.

This chapter synthesizes the economics, law, and technology of security tokens and security token offerings (STOs). Security tokens are an increasingly important instrument in decentralized finance (DeFi) markets. They are blockchain-based investment contracts that are subject to securities law. Interoperability, fractional ownership, market liquidity, and rapid settlement are the main reasons security tokens are a primary catalyst for digitizing finance. The chapter empirically compares STOs with initial exchange offerings (IEOs) and initial coin offerings (ICOs). STOs take longer and raise more funding. However, controlling for other factors, the amount raised in STOs and IEOs is lower than in utility-token ICOs. These findings suggest an avenue for future research. Moreover, both the law and the technology of security tokens need to address critical challenges related to the competent jurisdiction in multinational activities and blockchain interoperability, scalability, and natural resource degradation.

This chapter examines China’s corporate governance and accounting environment that shapes the adoption of internationally acceptable principles and standards. Specifically, it examines international influences, including supranational organizations; foreign investors and international accounting firms; domestic institutional influences, including the political system, economic system, legal system, and cultural system; and accounting infrastructure. China’s convergence is driven by desired efficiency of the corporate sector and legitimacy of participating in the global market. Influenced heavily by international forces in the context of globalization, corporate governance and accounting practices are increasingly becoming in line with internationally acceptable standards and codes. While convergence assists China in obtaining legitimacy, improving efficiency is likely to be adversely affected given that corporate governance and accounting in China operate in an environment that differs considerably from those of Anglo-American countries. An examination of the corporate governance and accounting environment in China suggests heavy government involvement within underdeveloped institutions. While the Chinese government has made impressive progress in developing the corporate governance and accounting environment for the market economy, China’s unique institutional setting is likely to affect how the imported concepts are interpreted and implemented.

This chapter discusses legal considerations relating to digital assets. The legal aspects of tokenized and non-tokenized assets are evolving. Although some states have enacted specific laws or regulations for digital assets, Congress and federal agencies have been slower to craft specific rules and regulations for such assets. As a result, regulators, such as the Securities and Exchange Commission, Commodity Futures Trading Commission, and Internal Revenue Service, and market participants must apply existing guidance to digital assets. This chapter examines applying specific aspects of federal securities and tax law to digital assets. It also discusses general business law considerations for blockchain and cyber enterprises. The discussion of state law applications centers on the New York Virtual Currency License and Wyoming and Delaware crypto initiatives. This chapter does not provide a comprehensive review of all legal issues related to cryptocurrency. Each legal issue about cryptocurrency is complex and requires separate analyses.