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

The PCAOB has released its Annual Report on the Interim Inspection Program Related to Audits of Brokers and Dealers(PDF). The report provides (1) information about our 2021 inspections approach, (2) a summary of our 2021 inspections observations, and (3) a description of “good practices,” which include brief scenarios and possible procedures that may be effective to address those scenarios.  

By highlighting deficiencies and good practices, the report helps drive improvement in the quality of audit services through a combination of prevention, detection, deterrence, and remediation. 

Among others, key observations from our 2021 inspections of firms that audit broker-dealers include the following: 

• The percentage of firms inspected where we identified one or more audit and/or attestation engagement deficiencies remained high at 78% in 2021, consistent with 2020. 

• The percentage of audit engagements reviewed where we identified deficiencies declined to 49% in 2021, from 61% in 2020, but remained high, primarily due to deficiencies associated with auditing revenue. 

• The percentage of firms inspected where we identified deficiencies in quality control systems declined to 48% in 2021, from 66% in 2020, with the majority of deficiencies in both years relating to engagement quality reviews. 

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 information about firms selected for inspection, as well as audit and attestation engagements for broker-dealers selected for review, in 2021 and prior years. We also provide supplementary information about the results of our inspections stratified by various firm, inspection, and broker-dealer characteristics. 

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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, including compliance reports filed pursuant to federal securities laws.