PCAOB Releases Staff Guidance for Auditors of SEC-Registered Brokers and Dealers

Washington, DC, Jun. 26, 2014

The Public Company Accounting Oversight Board today released staff guidance to help auditors of brokers and dealers registered with the Securities and Exchange Commission to plan and perform audits in accordance with PCAOB standards as mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act and SEC rules.

"To enhance investor protection, broker-dealer auditors must now meet PCAOB requirements," said PCAOB Chairman James R. Doty. "This guidance is tailored to help auditors of smaller broker-dealers develop a cost-effective, scaled approach to their audits."

The Dodd-Frank Act amended the Sarbanes-Oxley Act to, among other things, give the PCAOB oversight authority for the audits of broker-dealers registered with the SEC.

In July 2013, the SEC amended Exchange Act Rule 17a-5 to require, among other things, that audits of broker-dealers be conducted in accordance with PCAOB standards. In October 2013, the PCAOB adopted an auditing standard and two attestation standards that apply to broker-dealer audits. In February 2014, the SEC issued an order granting approval of the PCAOB's new auditing and attestation standards for audits of brokers and dealers.

The SEC amendments and PCAOB standards are effective for fiscal years ending on or after June 1, 2014. Prior to the effective date, those broker-dealer audits were performed under generally accepted auditing standards.

To help auditors with the transition, the staff guidance highlights relevant requirements for SEC-registered broker-dealer audits and attestation engagements, and provides guidance on the application of PCAOB standards to these engagements, particularly for audits of smaller broker-dealers with less complex operations.

Additionally, the publication highlights some of the significant provisions of SEC Rule 17a-5 and PCAOB standards and rules applicable to audits of broker-dealers.

"Auditors of broker-dealers are now subject to new requirements, including the requirement to apply PCAOB standards. This publication discusses how audits can be scaled, based on the size and complexity of the broker-dealer, to apply PCAOB standards and fulfill their important role of helping to protect customers of broker-dealers," said PCAOB Chief Auditor Martin F. Baumann.

The publication is available on the PCAOB website.