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Industry Spotlight > Broker Dealers

PCAOB Issues BD Audit Guide

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The Public Company Accounting Oversight Board released Thursday staff guidance to help auditors of brokers-dealers registered with the Securities and Exchange Commission to plan and perform audits in accordance with PCAOB standards as mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act and SEC rules.

“To enhance investor protection, broker-dealer auditors must now meet PCAOB requirements,” said PCAOB Chairman James Doty, in a statement. “This guidance is tailored to help auditors of smaller broker-dealers develop a cost-effective, scaled approach to their audits.”

The Dodd-Frank Act amended the Sarbanes-Oxley Act to, among other things, give the PCAOB oversight authority for the audits of broker-dealers registered with the SEC.

The staff guidance discusses how audits can be scaled, based on a BD’s size and complexity, to apply to PCAOB standards.

In July 2013, the SEC amended Exchange Act Rule 17a-5 to require, among other things, that audits of broker-dealers be conducted in accordance with PCAOB standards.

In October 2013, the PCAOB adopted an auditing standard and two attestation standards that apply to broker-dealer audits.

In February, the SEC approved the PCAOB’s new auditing and attestation standards for audits of brokers-dealers.

The SEC amendments and PCAOB standards are effective for fiscal years ending on or after June 1, 2014. Prior to the effective date, those broker-dealer audits were performed under generally accepted auditing standards.

To help auditors with the transition, the PCAOB says that its staff guidance highlights relevant requirements for SEC-registered broker-dealer audits and attestation engagements, and provides guidance on the application of PCAOB standards to these engagements, particularly for audits of smaller broker-dealers with less complex operations.

The publication highlights some significant provisions of SEC Rule 17a-5 and PCAOB standards and rules applicable to audits of broker-dealers.

Check out PCAOB Toughens BD Audit Standards on ThinkAdvisor.


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