Information for Auditors of Broker-Dealers

Annual Report on the Interim Inspection Program Related to the Audits of Brokers Dealers

This report includes observations from our inspections during 2018, insights into applicable standards, and examples of effective procedures. It also includes two appendices with information about the selection of firms and engagements for inspection and historical results from our inspections under the interim program. 

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    Background

    The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 vested the PCAOB with expanded oversight of the auditors of brokers and dealers registered with the U.S. Securities and Exchange Commission.  The PCAOB has registration, inspection, standard-setting, and disciplinary authority over the auditors of broker-dealers.

    When broker-dealers file their annual reports with the SEC, they are required to include their financial statements and supporting schedules, along with audit reports thereon prepared by PCAOB-registered public accounting firms.

    Broker-dealers also are required to file compliance or exemption reports, along with examination or review reports that are prepared by the same firms that prepared the audit reports. The audits, examinations, and reviews are required to be performed in accordance with PCAOB standards.  

    Inspections

    The Dodd-Frank Act authorized the PCAOB to establish, by rule, an inspection program for auditors of broker-dealers.

    The law leaves to the Board, subject to the approval of the SEC, important questions concerning the scope of the program and the frequency of inspections, including whether to differentiate among categories of broker-dealers, and whether to exclude any categories of auditors.

    In June 2011, the PCAOB established an interim program to inspect these auditors and identify and address with them any significant issues idenfitied in their audits and related attestation engagements.

    Annual Report on the Interim Inspection Program Related to the Audits of Brokers Dealers 

    PCAOB publishes a summary inspection report each year.

    Staff Inspection Briefs

    The PCAOB also periodically publishes staff inspection briefs on topics of interest to broker-dealer auditors.

    Enforcement

    The PCAOB exercises its enforcement authority, where appropriate, on audit, attestation, independence, and other deficiencies identified in the audits of broker-dealers.

    The Board has instituted disciplinary actions against auditors of broker-dealers, including proceedings that resulted in public enforcement orders that imposed sanctions, such as revoking the registration of firms, barring individuals from associating with a registered firm, and imposing civil money penalties on firms and individuals. 

    Recent Settled Orders

    Search all settled orders.

    Standards and Staff Guidance

    All audits and related attestation engagements of broker-dealers for fiscal years ended on or after June 1, 2014, are required to be performed in accordance with PCAOB standards.

    PCAOB standards and staff guidance of specific relevance to auditors of broker-dealers include:

    Other Releases and Guidance

    The PCAOB has published releases and guidance that describe and clarify requirements for audits and attestation engagements of broker-dealers.

    The SEC has published releases and FAQs that describe the amendments to the reporting requirements for broker-dealers, and the SEC financial responsibility rules.

    Outreach

    The Board is committed to outreach to auditors of broker-dealers.

    The PCAOB live-streams and hosts one-day forums around the country. Topics include PCAOB inspection findings, compliance with standards, enforcement matters, and other issues specific to these audits.

    The PCAOB also hosts webinars on specific topics of interest to broker-dealer auditors.

    Forums and webinars are offered at no cost and provide CPE credit. You can learn about upcoming forums and view details on past forums and webinars on our website.