Initial Broker-Dealer Audits Show Deficiencies

The first five inspections of broker-dealer audit and new attestation engagements subject to Public Company Accounting Oversight Board standards show deficiencies in the auditors' application of those standards, the board announced.

In a brief summary inspection report covering five broker-dealer engagements conducted by five auditors in 2014, the PCAOB described deficiencies, relative to the new requirements, observed in the five audits and four of the five related attestation engagements.

The PCAOB published the findings to remind auditors of the important changes to the requirements, particularly given the large number of auditors who will be applying them for the first time in engagements for broker-dealer clients with fiscal years that ended on Dec. 31, 2014.

PCAOB standards are required for broker-dealer annual reports with fiscal years that ended on or after June 1, 2014.

"This report alerts broker-dealer auditors — particularly those who are new to PCAOB oversight and applying board standards -- to the findings to help auditors think about the application of the new standards. Also, we want to make sure auditors know that they can receive assistance from us in understanding what the standards require," said PCAOB Chairman James Doty.

Auditors who seek clarification of the standards can e-mail questions to standards@pcaobus.org or review the PCAOB Staff Guidance for Auditors of SEC-Registered Brokers and Dealers published last June.

During 2015, the board plans to inspect approximately 75 firms and portions of approximately 115 audit and attestation engagements required to be conducted pursuant to PCAOB standards.