Information for Auditors of Broker-Dealers
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 gave the PCAOB oversight of auditors of broker-dealers registered with the U.S. Securities and Exchange Commission. The PCAOB has registration, inspection, standard-setting, and disciplinary
authority over the auditors of broker-dealers.
When broker-dealers file their annual reports with the SEC, they are required to include their financial statements and supporting schedules, typically along with audit reports prepared by PCAOB-registered public accounting firms.
Broker-dealers also are generally required to file compliance or exemption reports, along with examination or review reports that are prepared by the same firms that prepared the audit reports. The audits, examinations, and reviews are required to
be performed in accordance with PCAOB standards.
The Dodd-Frank Act authorized the PCAOB to establish, by rule, an inspection program for auditors of broker-dealers.
The law leaves to the Board, subject to the approval of the SEC, important questions concerning the scope of the program and the frequency of inspections, including whether to differentiate among categories of broker-dealers, and whether to exempt any
categories of auditors.
In June 2011, the PCAOB established an interim program to inspect these auditors and identify and address with them any significant issues observed
in their audits and related attestation engagements.
Annual Report on the Interim Inspection Program Related to the Audits of Brokers-Dealers
The PCAOB publishes a summary inspection report each year.
- Annual Report on 2019 Inspections (Aug. 2020)
- Annual Report on 2018 Inspections (August 2019)
- Executive Highlights of the Annual Report on 2017 Broker-Dealer Auditor Inspections (Aug. 2018)
- Annual Report on 2017 Inspections (August 2018)
- Annual Report on 2016 Inspections (Aug. 2017)
- Annual Report on 2015 Inspections (Aug. 2016)
- Annual Report on 2014 Inspections (Aug. 2015)
- Supplemental Report 2014 Inspections (Jan. 2015)
- Annual Report on 2013 Inspections (Aug. 2014)
- Annual Report on 2012 Inspections (Aug. 2013)
- Annual Report on 2011 Inspections (Aug. 2012)
The PCAOB exercises its enforcement authority, where appropriate, on audit, attestation, independence, and other deficiencies identified in the audits of broker-dealers.
The Board has instituted disciplinary actions against auditors of broker-dealers, including proceedings that resulted in public enforcement orders that imposed sanctions, such as revoking the registration of firms, barring individuals from associating
with a registered firm, and imposing civil money penalties on firms and individuals.
Standards and Staff Guidance
All audits and related attestation engagements of broker-dealers for fiscal years ended on or after June 1, 2014, are required to be performed in accordance with PCAOB standards.
PCAOB standards and staff guidance of specific relevance to auditors of broker-dealers include:
- Annotated Example Auditor’s Report for the Audit of a Broker or Dealer (Dec. 18, 2018)
- Staff Guidance for Auditors of SEC-Registered Broker-Dealers (June 2014)
- Auditing Supplemental Information Accompanying Audited Financial Statements (AS 2701)
- Examination Engagements Regarding Compliance Reports of Broker-Dealers (AT No. 1)
- Review Engagements Regarding Exemption Reports of Broker-Dealers (AT No. 2)
The Board is committed to outreach to auditors of broker-dealers.
The PCAOB hosts forums for auditors of broker-dealers. Topics include PCAOB inspection findings, standard-setting activities, enforcement matters, and other issues of interest to broker-dealer auditors.
- Staff Publications
- Standards for Attestation Engagements for Broker-Dealer Compliance or Exemption Reports Required by the SEC, and Related Amendments to PCAOB Standards (Release No. 2013-007)
- Amendments to Conform PCAOB Rules and Forms to the Dodd-Frank Act, and Make Certain Updates and Clarifications (Release No. 2013-010)
- Implementation Guidance, Staff Audit Practice Alerts, and Questions and Answers
- SEC Broker-Dealer Reports (Release No. 34-70073)
- SEC Financial Responsibility Rules for Broker-Dealers (Release No. 34-70072)
- SEC Frequently Asked Questions Concerning the Amendments to Certain Broker-Dealer Financial Responsibility Rules
- SEC Frequently Asked Questions Concerning the July 30, 2013 Amendments to the Broker-Dealer Financial Reporting Rule