Answers Custody & exchange safety

Is proof of reserves the same as an audit?

Updated August 1, 2026 · Zion Labs global

Answer

No. A proof-of-reserves report is normally an agreed-upon-procedures engagement: the firm performs a specific list of checks the exchange asked for and reports what it found, at one historical moment, without issuing an audit opinion or any assurance conclusion. A financial statement audit covers both sides of the balance sheet over a period; most proof-of-reserves reports show only assets, which says nothing about whether those assets exceed what customers are owed.

Nuances and considerations

  • The liability side is the whole question, and it is the harder half. Proving an exchange controls a wallet is straightforward — it signs a message. Proving that the total it owes customers is smaller than that balance requires the exchange to publish its liabilities, usually as a Merkle tree of hashed customer balances that each customer can verify their own row against. A report covering reserves without liabilities is not a solvency statement, and reporting on liabilities the exchange itself supplied is only as good as those records.
  • A snapshot is a snapshot. The findings describe balances at a specific historical moment. Assets borrowed the day before and returned the day after would still appear. Frequency and unpredictability of the snapshot matter more than the existence of a single report.
  • Scope is often narrower than the headline. Reports can cover a subset of assets or a subset of entities. Read what was in scope before reading the conclusion.
  • The professional-services position has been openly uncomfortable. In December 2022 Mazars paused its proof-of-reserves work for crypto clients, telling CNBC it had done so “due to concerns regarding the way these reports are understood by the public.” The reports themselves stated that they did not constitute an assurance or audit opinion — the gap between what they said and how they were read is the reason that pause happened.
  • “Audited” and “attested” are not interchangeable, and neither means “insured.” A clean report says nothing about what happens to your assets if the company fails. That is a separate question about how the assets are held and what your customer agreement says.

What to check on any proof-of-reserves page

  1. Does it include liabilities, or only reserves?
  2. Can you verify your own balance is included, via a Merkle proof or equivalent?
  3. What is the as-of date, and how often is the exercise repeated?
  4. Which entities and which assets were in scope?
  5. Does the report describe itself as an audit opinion, an assurance engagement, or agreed-upon procedures? The wording is in the report.

Sources

  1. Mazars to pause all crypto exchange proof-of-reserves reports — The Block Supports: The December 2022 pause, and the stated reason for it.
  2. Mazars Group suspends all work with crypto clients including Binance, Crypto.com, citing concerns over public perception of proof of reserves — CNBC Supports: Scope and date of the pause, and the firm's statement that it acted over concerns about how the reports were being understood by the public.
  3. Auditing Firm Mazars Pauses Proof-of-Reserves Work for Crypto Clients — CoinDesk Supports: That the reports were performed under agreed-upon-procedures reporting standards, did not constitute an assurance or audit opinion, and reported limited findings at a historical point in time.

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