PCAOB Staff Report Shares Insights on Potential Factors Contributing to High Rates of Broker-Dealer Audit Deficiencies

Today, the PCAOB released a new staff report, “Insights Into the PCAOB’s Interim Inspection Program Related to Audits of Broker-Dealers(PDF).” 

Overseeing audits of broker-dealers is a key component of the PCAOB’s mission to protect investors. Based on results from the PCAOB interim inspection program to inspect broker-dealer audits, PCAOB staff believes there is a need for significant improvement in the quality of broker-dealer audit and attestation engagements. Overall deficiency rates in broker-dealer engagements remain unacceptably high.

This report provides additional inspection-related insights and reminders from the PCAOB staff regarding potential factors contributing to the high deficiency rates in broker-dealer engagements. Topics covered include the following:

• Insufficient Understanding of the Broker-Dealer Industry
• Lack of Professional Skepticism
• Lack of Rigor in Risk Assessment and Internal Controls
• Inexperience With PCAOB Standards
• Ineffective Engagement Quality Review
• Overreliance on Standardized Audit Programs
• Low-Cost Providers and the Pace of Auditor Changes

Visit the PCAOB’s Information for Auditors of Broker-Dealers page to learn more about the PCAOB’s interim inspection program, including annual reports, enforcement, standards and staff guidance, and related information.

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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.