Information for Auditors of Broker-Dealers

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 vested the PCAOB with expanded oversight of the audits of brokers and dealers registered with the Securities and Exchange Commission to include inspections, enforcement and standard-setting authority of their auditors.

Financial statements of broker-dealers filed with the SEC must be certified by a PCAOB-registered public accounting firm. 

Broker-Dealer Audit and Attestation Standards

Standards and guidance for broker-dealer audit and attestation engagements

Inspections

PCAOB Board member Jay Hanson an inspection summary report on Deficiencies in Broker-Dealer Audits under PCAOB Standards (Jan. 2015)

The Dodd-Frank Act authorized the Board to establish, by rule, a program of inspection of auditors of brokers and dealers. The law leaves to the Board, subject to the approval of the Securities and Exchange Commission, important questions concerning the scope of the program and the frequency of inspections, including whether to differentiate among categories of brokers and dealers and whether to exclude from the inspection program any categories of auditors.

A temporary rule adopted by the Board June 14, 2011, provides for an interim inspection program while the Board considers the scope and other elements of a permanent inspection program. The SEC approved the rule Aug. 18, 2011.

Under the temporary rule, the Board is inspecting auditors of brokers and dealers and identifying and addressing with the registered firms any significant issues in those audits. The Board also expects that insights gained through the interim program will inform the eventual determination of the scope and elements of a permanent program.

During the interim program, the Board will provide public reports annually on the progress of the interim program and significant issues identified. In the absence of unusual circumstances, however, the Board will not issue firm-specific inspection reports before inspection work is performed under the permanent program and will not issue firm-specific inspection reports on any firms that are eventually excluded from the scope of the permanent program.

Enforcement

PCAOB Announces Settled Disciplinary Orders And Extraordinary Cooperation Credit In Audits of Broker-Dealers (July 9, 2015) 

PCAOB Announces Settled Disciplinary Orders Against Seven Audit Firms for Independence Violations When Auditing Broker-Dealers (Dec. 8, 2014)

Forums for Auditors of Broker-Dealers

These are one-day seminars designed for auditors of smaller brokers and dealers that cover the PCAOB inspection process, compliance with standards, and other issues specific to the broker-dealer auditor community.

Funding

Section 109 of the Sarbanes-Oxley Act, as originally enacted, provided that funds to cover the PCAOB annual budget, less registration and annual fees paid by registered public accounting firms, would be collected from issuers based on each issuer's relative average monthly equity market capitalization. The amount due from issuers is referred to as the accounting support fee.

As amended by the Dodd-Frank Act, Section 109 requires that the Board allocate respective portions of its total accounting support fee among issuers and brokers and dealers, and allows for differentiation among classes of issuers and brokers and dealers.