PCAOB: Broker-dealer audits improve

Published June 12, 2026 1:48 PM

1 Min Read

Deficiency rates in audits of broker-dealers declined in 2025, according to inspections by the Public Company Accounting Oversight Board — particularly for those auditors that perform a large number of engagements.

The annual report from the PCAOB reviewed the results of its inspections of 61 firms and its review of 103 audits. Just under a third of the audits (31) were performed by firms that audited more than 100 broker-dealers (which the board calls "the largest firms"), and the rest by a range of other firms.

"Overall, in 2025 we observed a decrease in deficiency rates in examination, review, and audit engagements; however, the deficiency rates indicate opportunities for continued improvement by audit firms," the report said.

The improvements were, however, concentrated largely among the largest firms.

Deficiencies in review engagements at the largest firms dropped nearly in half in 2025, and were primarily related to firms failing to sufficiently understand the broker-dealer activities relevant to exemptions claimed under the Customer Protection Rule, or not performing required inquiries regarding controls and related monitoring activities.

The board noted that in examination engagements, some firms did not perform sufficient procedures to examine broker-dealers' assertions related to internal controls over compliance. It also saw an uptick in failure to test any important controls over financial responsibility rules.

The number of audit engagements with deficiencies related to the sufficiency or appropriateness of supporting evidence for the audit opinion dropped 10 percentage points overall, and even more for the largest firms, where the percentage went from 42% in 2024 to 29%.

The audit procedures with the highest number of identified deficiencies were in the areas of revenue, evaluating audit results, and journal entries.

Broker-dealer audits are distributed relatively evenly along a spectrum from firms that perform very few audits to those that perform a great many – but the improvements in performance in 2025 were concentrated among those auditors that conduct the most.

Editor-in-chief

Daniel Hood has been editor-in-chief of Accounting Today since 2011; he joined Accounting Today as managing editor in 1998. A graduate of Georgetown... Read full bio

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