PCAOB Issues 2020 Annual Report on the Interim Inspection Program Related to Audits of Brokers and Dealers

The PCAOB has released the 2020 Annual Report on the Interim Inspection Program Related to Audits of Brokers and Dealers(PDF). The report provides (1) information about our 2020 inspections approach, (2) a summary of our 2020 inspections observations, and (3) “good practices,” which include brief scenarios and possible procedures that may be effective to address those scenarios.

Overarching observations from our 2020 inspections of firms that audit broker-dealers include the following:

• The number of firms that had one or more audit and/or attestation engagements with deficiencies showed a 14% drop from 2019 but remained high as a percentage of firms inspected (78%).
• The number of audit engagements with deficiencies declined 15% from 2019 levels but remained high as a percentage of engagements reviewed (61%), primarily due to deficiencies in auditing revenue.
• Generally, the results of inspections of firms that audited more than 100 broker-dealers resulted in lower percentages of audit engagements with deficiencies (38%), compared to the results for firms that audited 100 or fewer broker-dealers (71%).

In addition to the annual report, the PCAOB also released a separate publication, Supplementary Information Related to Audits of Brokers and Dealers(PDF). This supplement presents comparative data about selected firms and engagements, as well the results of PCAOB inspections, over multi-year periods.

Auditors of broker-dealers are encouraged to consider the observations included in the annual report to identify opportunities to improve the quality of their broker-dealer engagements.

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About the PCAOB

The PCAOB is a nonprofit corporation established by Congress to oversee the audits of public companies in order to protect investors and further the public interest in the preparation of informative, accurate, and independent audit reports. The PCAOB also oversees the audits of brokers and dealers registered with the Securities and Exchange Commission, including compliance reports filed pursuant to federal securities laws.