PCAOB still sees problems in broker-dealer audits

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The Public Company Accounting Oversight Board is continuing to uncover problems with auditor independence during recent inspections of auditors of brokers and dealers.

The PCAOB released a staff inspection brief Wednesday previewing its upcoming report on the board’s 2016 inspections of broker-dealer audits. The PCAOB said it is still seeing signs of impaired auditor independence, with auditors actually getting involved in the preparation of the financial statements and accounting records of their audit clients.

The inspections staff continued to detect a number of deficiencies in financial statement audit areas, similar to the kind uncovered in previous years. Those included problems with revenue recognition, financial statement presentation and disclosures, and the assessment of risks of material misstatement due to fraud. PCAOB inspectors also found auditors did not do enough when assessing relationships and transactions with related parties.

Last year, PCAOB inspectors also saw deficiencies in a number of other areas, such as audit procedures on the supporting schedules that accompanied the financial statements, attestation engagement procedures, examinations of compliance reports and reviews of exemption reports, along with engagement quality reviews.

“This preview of 2016 inspection results may benefit auditors of broker-dealers as they plan and perform future audits,” said PCAOB director of registration and inspections Helen A. Munter in a statement.

The PCAOB staff looked at 75 firms and 115 audit and attestation engagements last year for its broker-dealer audit inspections. The full report will be issued in August.

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