PCAOB Publishes Staff Inspection Brief Previewing the Results of 2016 Inspections of Auditors of Broker-Dealers

WASHINGTON, Jun. 28, 2017

The Public Company Accounting Oversight Board today published a staff inspection brief that previews results of the 2016 inspections of auditors of brokers and dealers.

PCAOB inspectors continued to observe impaired auditor independence as auditors were involved in the preparation of the financial statements or accounting records of their audit clients.

"This preview of 2016 inspection results may benefit auditors of broker-dealers as they plan and perform future audits," said Helen A. Munter, Director of Registration and Inspections.

Inspections staff continued to observe deficiencies in financial statement audit areas similar to previous inspection cycles, including revenue recognition, financial statement presentation and disclosures, and the assessment of risks of material misstatement due to fraud. In addition, PCAOB inspectors observed that auditors did not sufficiently assess relationships and transactions with related parties.

In 2016, PCAOB inspectors also observed deficiencies in areas including audit procedures on the supporting schedules that accompanied the financial statements; procedures for the attestation engagements: the examinations of compliance reports and the reviews of exemption reports; and engagement quality reviews.

PCAOB staff inspected 75 firms in 2016 covering 115 audit and attestation engagements. The selected audit and attestation engagements were for fiscal years that ended during the period from June 30, 2015, through June 30, 2016.

Observations from the inspections performed in 2016 will be detailed in the next "Annual Report on the Interim Inspection Program Related to the Audits of Brokers and Dealers," to be issued in August 2017.

The PCAOB inspects firms that perform audits of broker-dealers registered with the Securities and Exchange Commission. These inspections are intended to assess the firm's audit and attestation engagements for compliance with professional standards, rules of the SEC and the PCAOB, and the Sarbanes-Oxley Act of 2002.