The Public Company Accounting Oversight Board said Wednesday that its first five inspections of broker-dealer audit and new attestation engagements subject to PCAOB standards show deficiencies in the auditors’ application of these standards.
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 Securities and Exchange Commission.
The requirement to follow PCAOB standards became effective for broker-dealer annual reports with fiscal years that ended on or after June 1, 2014.
The PCAOB audit standards differ in certain respects from audit standards that previously applied. In addition, PCAOB says that the new attestation standards distinguish between the requirements for carrying broker-dealers with custody of customer assets and those who are non-carrying and do not have such custody.
PCAOB released Wednesday a summary inspection report covering five broker-dealer audit and attestation engagements conducted by five auditors in 2014, which describes deficiencies, relative to the new requirements, observed in the five audits and four of the five related attestation engagements.
“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,” said PCAOB Chairman James R. Doty, in a statement. “Also, we want to make sure auditors know that they can receive assistance from us in understanding what the standards require.”