Broker-dealer audit deficiencies on the rise, PCAOB finds

<!DOCTYPE html> <html prefix="og: http://ogp.me/ns# article: http://ogp.me/ns/article#" class="no-js"> <head> <title>Broker-dealer audit deficiencies on the rise, PCAOB finds</title> <script defer="defer" type="text/javascript" src="https://rum.hlx.page/.rum/@adobe/helix-rum-js@%5E2/dist/rum-standalone.js" data-routing="p00000-e000000"></script> <link rel="shortcut icon" href="/content/dam/jofa/favicons/favicon.ico"/> <link rel="apple-touch-icon-precomposed" sizes="57x57" href="/content/dam/jofa/favicons/apple-touch-icon-57x57.png"/> <link rel="apple-touch-icon-precomposed" sizes="114x114" href="/content/dam/jofa/favicons/apple-touch-icon-114x114.png"/> <link rel="apple-touch-icon-precomposed" sizes="72x72" href="/content/dam/jofa/favicons/apple-touch-icon-72x72.png"/> <link rel="apple-touch-icon-precomposed" sizes="144x144" href="/content/dam/jofa/favicons/apple-touch-icon-144x144.png"/> <link rel="apple-touch-icon-precomposed" sizes="60x60" href="/content/dam/jofa/favicons/apple-touch-icon-60x60.png"/> <link rel="apple-touch-icon-precomposed" sizes="120x120" href="/content/dam/jofa/favicons/apple-touch-icon-120x120.png"/> <link rel="apple-touch-icon-precomposed" sizes="76x76" href="/content/dam/jofa/favicons/apple-touch-icon-76x76.png"/> <link rel="apple-touch-icon-precomposed" sizes="152x152" href="/content/dam/jofa/favicons/apple-touch-icon-152x152.png"/> <link rel="icon" type="image/png" sizes="196x196" href="/content/dam/jofa/favicons/favicon-196x196.png"/> <link rel="icon" type="image/png" sizes="96x96" href="/content/dam/jofa/favicons/favicon-96x96.png"/> <link rel="icon" type="image/png" sizes="32x32" href="/content/dam/jofa/favicons/favicon-32x32.png"/> <link rel="icon" type="image/png" sizes="16x16" href="/content/dam/jofa/favicons/favicon-16x16.png"/> <link rel="icon" type="image/png" sizes="128x128" href="/content/dam/jofa/favicons/favicon-128.png"/> <meta name="msapplication-TileColor" content="#FFFFFF" /> <meta name="msapplication-TileImage" content="/content/dam/jofa/favicons/mstile-144x144.png" /> <meta name="msapplication-square70x70logo" content="/content/dam/jofa/favicons/mstile-70x70.png" /> <meta name="msapplication-square310x310logo" content="/content/dam/jofa/favicons/mstile-310x310.png" /> <link rel="canonical" href="https://www.journalofaccountancy.com/news/2024/jul/broker-dealer-audit-deficiencies-on-the-rise-pcaob-finds.html"/> <meta http-equiv="content-type" content="text/html" charset="utf-8"> <meta http-equiv="X-UA-Compatible" content="IE=edge"> <meta charset="utf-8"> <meta name="viewport" content="width=device-width, initial-scale=1"> <meta name="msapplication-tap-highlight" content="no"> <meta property="og:title" content="Broker-dealer audit deficiencies on the rise, PCAOB finds" /> <meta property="og:type" content="article" /> <meta property="og:url" content="https://www.journalofaccountancy.com/news/2024/jul/broker-dealer-audit-deficiencies-on-the-rise-pcaob-finds.html" /> <meta name="description" content="The board’s annual report identifies deficiencies in 70% of audit engagement reviews, offers advice aimed at reducing the number."> <meta property="og:description" content="The board’s annual report identifies deficiencies in 70% of audit engagement reviews, offers advice aimed at reducing the number." /> <meta property="article:published_time" content="2024-07-29T15:28:27.000-04:00" /> <meta property="article:tag" content="Accounting & Reporting"/> <meta property="article:tag" content="Audit & Assurance"/> <meta property="article:tag" content="Audit"/> <meta property="og:site_name" content="Journal of Accountancy" /> <meta property="fb:app_id" content="613882402074338"/> <meta property="og:image" content="https://www.journalofaccountancy.com/content/dam/jofa/info/jofa-default-image.jpg"/> <script src="https://ajax.googleapis.com/ajax/libs/jquery/3.5.1/jquery.min.js"></script> <script> window.jQuery || document.write("<script src='/etc/clientlibs/dot-org/assets/jquery.min.js'><\/script>"); </script>  <link rel="stylesheet" href="/etc/clientlibs/aicpa/assets/publish.min.css" type="text/css"> <link rel="stylesheet" href="/etc/clientlibs/aicpa/assets.min.css" type="text/css"> <link rel="stylesheet" href="/etc/clientlibs/aicpa/assets/components-footer.min.css" type="text/css"> <script type="text/javascript" src="/content/jofa-home/news/2024/jul/broker-dealer-audit-deficiencies-on-the-rise-pcaob-finds/_jcr_content.adproperties.js"></script> <script src="/etc/clientlibs/aicpa/assets/vendor/modernizr.min.js"></script> <script src="/etc/clientlibs/aicpa/assets/components-header.min.js"></script> <script type="text/javascript" src="/etc/cloudservices/doubleclick-ads/jofa/_jcr_content.js"></script>  <script>(function(w,d,s,l,i){w[l]=w[l]||[];w[l].push({'gtm.start': new Date().getTime(),event:'gtm.js'});var f=d.getElementsByTagName(s)[0], j=d.createElement(s),dl=l!='dataLayer'?'&l='+l:'';j.async=true;j.src= 'https://www.googletagmanager.com/gtm.js?id='+i+dl;f.parentNode.insertBefore(j,f); })(window,document,'script','dataLayer','GTM-ND9QBJ6');</script>  <script> !function(f,b,e,v,n,t,s){if(f.fbq)return;n=f.fbq=function(){n.callMethod? n.callMethod.apply(n,arguments):n.queue.push(arguments)};if(!f._fbq)f._fbq=n; n.push=n;n.loaded=!0;n.version='2.0';n.queue=[];t=b.createElement(e);t.async=!0; t.src=v;s=b.getElementsByTagName(e)[0];s.parentNode.insertBefore(t,s)}(window, document,'script','https://connect.facebook.net/en_US/fbevents.js'); fbq('init', '1572149056410857'); // Insert your pixel ID here. fbq('track', 'PageView'); </script> <noscript><img height="1" width="1" style="display:none" src="https://www.facebook.com/tr?id=1572149056410857&ev=PageView&noscript=1"/></noscript>  <script type="text/javascript" src="//s7.addthis.com/js/300/addthis_widget.js#pubid=ra-5afd8cf5c4eeb8ea"></script><script> var webData = [{ page: { pageName: "journal of accountancy:news:2024:broker-dealer-audit-deficiencies-on-the-rise-pcaob-finds", siteProperty: "journal of accountancy", siteSection: "news", siteSubSection: "2024", siteHierarchy: "journal of accountancy|news|2024", contentType: "" } }]; </script> <script src="https://assets.adobedtm.com/launch-EN2c0e28c6709c4e27a936ae1de1381bd2.min.js" integrity="sha384-0oD5l4LMjgfnMWxxFyeyqSUFT3lS5cnne4UZi9a5CoVhGGctt4V3egBrlto3uzhH" crossorigin="anonymous"></script><link rel="stylesheet" href="/etc/clientlibs/jofa/assets/components-header.min.css" type="text/css"> <link rel="stylesheet" media="print" href="/etc/clientlibs/jofa/assets/print.css" type="text/css"> <script type="application/ld+json"> {"@context":"http://schema.org","@type":"NewsArticle","mainEntityOfPage":{"@type":"WebPage","@id":"https://www.journalofaccountancy.com/news/2024/jul/broker-dealer-audit-deficiencies-on-the-rise-pcaob-finds.html"},"headline":"Broker-dealer audit deficiencies on the rise, PCAOB finds","image":{"@type":"ImageObject","url":"https://www.journalofaccountancy.com/content/dam/jofa/info/jofa-default-image.jpg","height":630,"width":1200},"datePublished":"2024-07-29T15:28:27.000-04:00","dateModified":"2024-07-29T15:28:27.000-04:00","keywords":"","author":{"@type":"Person","name":"By Bryan Strickland"},"publisher":{"@type":"NewsMediaOrganization","@id":"https://www.journalofaccountancy.com","name":"Journal of Accountancy","logo":{"@type":"ImageObject","url":"https://www.journalofaccountancy.com/content/dam/jofa/info/jofa-logo-black-600.jpg","width":600,"height":109}},"description":"The board\u2019s annual report identifies deficiencies in 70% of audit engagement reviews, offers advice aimed at reducing the number.","abstract":"The board\u2019s annual report identifies deficiencies in 70% of audit engagement reviews, offers advice aimed at reducing the number."}</script> </head> <body class="articlePage">  <noscript><iframe src="https://www.googletagmanager.com/ns.html?id=GTM-ND9QBJ6" height="0" width="0" style="display:none;visibility:hidden"></iframe></noscript> <div class="header iparsys parsys"><div class="section"><div class="new"></div> </div><div class="iparys_inherited"><div class="header iparsys parsys"><div class="integratedheader section"><div class="cookieBanner"><div class="container hidden"> <div class="row"> <div class="cookie-banner" id=""> <a class="banner-close" href="#" title=""> <span class="icon-exit"></span> <span class="hidden-xs"></span> </a> <p>This site uses cookies to store information on your computer. Some are essential to make our site work; others help us improve the user experience. By using the site, you consent to the placement of these cookies. Read our <a href="https://www.aicpa-cima.com/help/privacy-policy" target="_blank">privacy policy</a> to learn more.</p> </div> </div> </div> </div> <nav class="navbar" role="navigation"> <div class="container navbar-container"> <div class="hidden-xs hidden-sm collapse navbar-collapse utility-collapse"> <div class="top-logo logo"><a class='navbar-brand' target="_blank" href="https://www.aicpa-cima.com"> <div data-picture data-alt='AICPA-CIMA'> <div data-src='/content/dam/jofa/info/aicpa-cima-new.png' data-media></div> <img src='/content/dam/jofa/info/aicpa-cima-new.png' alt='AICPA-CIMA'> </div> </a> </div> <div class="tagline"></div> <div class="top-navlinks links"><ul class="nav navbar-nav navbar-right" data-event=""> <li><p>AICPA & CIMA:</p></li> <li><a title="" href="https://www.aicpa-cima.com/home"><span>Home</span></a> <li><a title="" href="https://www.aicpa-cima.com/cpe-learning"><span>CPE & Learning</span></a> <li><a title="" href="https://www.aicpa-cima.com/login"><span>My Account</span></a> </ul> </div> </div> <div class="navbar-header"> <button type="button" class="navbar-toggle search-toggle collapsed" data-toggle="collapse" data-target="#search-collapse"> <span class="sr-only">Toggle search</span> <span class="icon-search"></span> </button> <button type="button" class="navbar-toggle navigation-toggle collapsed" data-toggle="collapse" data-target="#navigation-collapse"> <span class="sr-only">Toggle navigation</span> <span class="icon-bar"></span> <span class="icon-bar"></span> <span class="icon-bar"></span> </button> <div class="logo"><a class='navbar-brand' href="/"> <div data-picture data-alt='Journal of Accountancy'> <div data-src='/content/dam/jofa-test/header/logo.png' data-media></div> <img src='/content/dam/jofa-test/header/logo.png' alt='Journal of Accountancy'> </div> </a> </div> </div> <div class="collapse navbar-collapse search-collapse" id="search-collapse"> <div class="searchbar"><form action="/search.html" class="navbar-form navbar-right" role="search" accept-charset="UTF-8"> <input type="hidden" name="_charset_" value="utf-8"> <div class="form-group input-group"> <input type="text" name="q" class="form-control" value="" placeholder=""> <input type="hidden" name="language" value="en"> <div class="input-group-btn"> <button type="submit" class="btn btn-search" tabindex="-1"> <span class="icon-search"></span> </button> </div> </div> </form> </div> </div> <div class="collapse navbar-collapse navigation-collapse" id="navigation-collapse"> <div class="navbar-nav-container"> <ul class="nav navbar-nav"> <li class="dropdown"> <a href="/topics/technology.html" target="" class="dropdown-toggle" data-toggle="dropdown"> Tech & AI</a> <div class="dropdown-menu" role="menu"> <ul> <li> <a href="/topics/technology.html" target=""> All articles</a> </li> <li> <a href="/topics/artificial-intelligence-ai.html" target=""> Artificial Intelligence (AI)</a> </li> <li> <a href="/topics/technology/microsoft-excel-tips.html" target=""> Microsoft Excel</a> </li> <li> <a href="/topics/technology/data-information-security.html" target=""> Information Security & Privacy</a> </li> </ul> <div class="dropdown-feature" id="fe9d313d-a395-4bc3-96a2-7e1e9a352771"> <h4>Latest Stories</h4> <ul class="main-nav-feature-list"> <script type="text/x-template" id="fe9d313d-a395-4bc3-96a2-7e1e9a352771-main-nav-template"> <li><a href="{page.path}.html">{articleTitle}</a></li> </script> </ul> </div> </div> <script> jQuery(document).ready(function () { jQuery('#fe9d313d-a395-4bc3-96a2-7e1e9a352771').mainnav({ componentPath: '/content/jofa-home/jcr:content/header/integratedheader/mainNav1', locale: "en" }); }); </script> </li> <li class="dropdown"> <a href="/topics/tax.html" target="" class="dropdown-toggle" data-toggle="dropdown"> TAX</a> <div class="dropdown-menu" role="menu"> <ul> <li> <a href="/topics/tax.html" target=""> All articles</a> </li> <li> <a href="/topics/tax/corporations.html" target=""> Corporations</a> </li> <li> <a href="/topics/tax/employee-benefits.html" target=""> Employee benefits</a> </li> <li> <a href="/topics/tax/individual-income-taxation.html" target=""> Individuals</a> </li> <li> <a href="/topics/tax/irs-practice-procedure.html" target=""> IRS procedure</a> </li> </ul> <div class="dropdown-feature" id="15cb5b7c-55e7-49e0-b8e8-ff7395ac4c69"> <h4>Latest Stories</h4> <ul class="main-nav-feature-list"> <script type="text/x-template" id="15cb5b7c-55e7-49e0-b8e8-ff7395ac4c69-main-nav-template"> <li><a href="{page.path}.html">{articleTitle}</a></li> </script> </ul> </div> </div> <script> jQuery(document).ready(function () { jQuery('#15cb5b7c-55e7-49e0-b8e8-ff7395ac4c69').mainnav({ componentPath: '/content/jofa-home/jcr:content/header/integratedheader/mainNav2', locale: "en" }); }); </script> </li> <li class="dropdown"> <a href="/topics/practice-management.html" target="" class="dropdown-toggle" data-toggle="dropdown"> PRACTICE MANAGEMENT</a> <div class="dropdown-menu" role="menu"> <ul> <li> <a href="/topics/practice-management.html" target=""> All articles</a> </li> <li> <a href="/topics/practice-management/diversity-equity-inclusion.html" target=""> Diversity, equity & inclusion</a> </li> <li> <a href="/topics/practice-management/human-capital.html" target=""> Human capital</a> </li> <li> <a href="/topics/practice-management/financial-admin-operations.html" target=""> Firm operations</a> </li> <li> <a href="/topics/practice-management/practice-growth-client-service.html" target=""> Practice growth & client service</a> </li> </ul> <div class="dropdown-feature" id="fda0387d-0909-4813-bf5e-887479a5f5cd"> <h4>Latest Stories</h4> <ul class="main-nav-feature-list"> <script type="text/x-template" id="fda0387d-0909-4813-bf5e-887479a5f5cd-main-nav-template"> <li><a href="{page.path}.html">{articleTitle}</a></li> </script> </ul> </div> </div> <script> jQuery(document).ready(function () { jQuery('#fda0387d-0909-4813-bf5e-887479a5f5cd').mainnav({ componentPath: '/content/jofa-home/jcr:content/header/integratedheader/mainNav3', locale: "en" }); }); </script> </li> <li class="dropdown"> <a href="/topics/financial-reporting.html" target="" class="dropdown-toggle" data-toggle="dropdown"> FINANCIAL REPORTING</a> <div class="dropdown-menu" role="menu"> <ul> <li> <a href="/topics/financial-reporting.html" target=""> All articles</a> </li> <li> <a href="/topics/financial-reporting/us-accounting-financial-reporting.html" target=""> FASB reporting</a> </li> <li> <a href="/topics/financial-reporting/ifrs-compliance-reporting.html" target=""> IFRS</a> </li> <li> <a href="/topics/financial-reporting/private-company-financial-reporting.html" target=""> Private company reporting</a> </li> <li> <a href="/topics/financial-reporting/sec-compliance-reporting.html" target=""> SEC compliance and reporting</a> </li> </ul> <div class="dropdown-feature" id="a9eccb44-2150-4344-9e0c-10987097a2c8"> <h4>Latest Stories</h4> <ul class="main-nav-feature-list"> <script type="text/x-template" id="a9eccb44-2150-4344-9e0c-10987097a2c8-main-nav-template"> <li><a href="{page.path}.html">{articleTitle}</a></li> </script> </ul> </div> </div> <script> jQuery(document).ready(function () { jQuery('#a9eccb44-2150-4344-9e0c-10987097a2c8').mainnav({ componentPath: '/content/jofa-home/jcr:content/header/integratedheader/mainNav4', locale: "en" }); }); </script> </li> <li class="dropdown"> <a href="/topics/auditing.html" target="" class="dropdown-toggle" data-toggle="dropdown"> AUDIT</a> <div class="dropdown-menu" role="menu"> <ul> <li> <a href="/topics/auditing.html" target=""> All articles</a> </li> <li> <a href="/topics/auditing/performing-an-attest-engagement.html" target=""> Attestation</a> </li> <li> <a href="/topics/auditing/performing-an-audit.html" target=""> Audit</a> </li> <li> <a href="/topics/auditing/compilation-and-review.html" target=""> Compilation and review</a> </li> <li> <a href="/topics/auditing/peer-review.html" target=""> Peer review</a> </li> <li> <a href="/topics/auditing/quality-management.html" target=""> Quality Management</a> </li> </ul> <div class="dropdown-feature" id="49ebb384-f70a-4fea-bce9-c1a1b45ec108"> <h4>Latest Stories</h4> <ul class="main-nav-feature-list"> <script type="text/x-template" id="49ebb384-f70a-4fea-bce9-c1a1b45ec108-main-nav-template"> <li><a href="{page.path}.html">{articleTitle}</a></li> </script> </ul> </div> </div> <script> jQuery(document).ready(function () { jQuery('#49ebb384-f70a-4fea-bce9-c1a1b45ec108').mainnav({ componentPath: '/content/jofa-home/jcr:content/header/integratedheader/mainNav5', locale: "en" }); }); </script> </li> <li class="dropdown"> <a href="/topics/management-accounting.html" target="" class="dropdown-toggle" data-toggle="dropdown"> MANAGEMENT ACCOUNTING</a> <div class="dropdown-menu" role="menu"> <ul> <li> <a href="/topics/management-accounting.html" target=""> All articles</a> </li> <li> <a href="/topics/management-accounting/planning-budgeting-forecasting.html" target=""> Business planning</a> </li> <li> <a href="/topics/management-accounting/hr-talent-management.html" target=""> Human resources</a> </li> <li> <a href="/topics/management-accounting/risk-management-internal-control.html" target=""> Risk management</a> </li> <li> <a href="/topics/management-accounting/strategy-governance.html" target=""> Strategy</a> </li> </ul> <div class="dropdown-feature" id="813253a3-619a-426c-a430-e6a192c80c28"> <h4>Latest Stories</h4> <ul class="main-nav-feature-list"> <script type="text/x-template" id="813253a3-619a-426c-a430-e6a192c80c28-main-nav-template"> <li><a href="{page.path}.html">{articleTitle}</a></li> </script> </ul> </div> </div> <script> jQuery(document).ready(function () { jQuery('#813253a3-619a-426c-a430-e6a192c80c28').mainnav({ componentPath: '/content/jofa-home/jcr:content/header/integratedheader/mainNav6', locale: "en" }); }); </script> </li> </ul> </div> <ul class="nav navbar-nav navbar-right" data-event=""> <li><a title="" href="/news.html"><span>News</span></a> <li><a title="" href="/issues/2025/feb.html"><span>Magazine</span></a> <li><a title="" href="/podcast.html"><span>Podcast</span></a> <li><a title="" href="/videos.html"><span>Video</span></a> </ul> </div> </div> </nav> <script> jQuery(document).ready(function(){ methods.androidSearchbarCollapseHandler(); }); </script> </div> </div> </div> </div> <main role="main" class="container"> <div class="row"> <div class="col-sm-12"> <div class="hero-section parsys"> </div> </div> </div> <div class="row"> <div class="col-sm-12"> <div class="advertisement-section iparsys parsys"><div class="section"><div class="new"></div> </div><div class="iparys_inherited"><div class="advertisement-section iparsys parsys"><div class="doubleclickAds section"><div class="advertisement"> <div id="jofa-adslot-0"> <script type="text/javascript"> googletag.cmd.push(function () { googletag.display('jofa-adslot-0'); }); </script> </div> </div> <br> </div> <div class="breakingnews section"><div id="17f25cff-3361-4944-9482-9e5a8e2dd934" data-event="" class="breaking-news" style="display:none" > <div class="well clearfix"> <span class="section-header"> Breaking News</span> <div class="breaking-news-template-section"></div> </div> </div> <script type="text/x-template" id="breaking-news-template"> <div data-picture class='hidden-xs pull-left' data-alt='{featureImage.alt}'> {@ne key="{featureImage.renditions.default}" value=""} <div data-src='{featureImage.renditions.default}' data-media></div> <img src='{featureImage.renditions.default}' alt='{featureImage.alt}'> {/ne} {#featureImage.renditions.breakpoints} <div data-src="{path}" data-media="{media}"></div> {/featureImage.renditions.breakpoints} </div> <article> {@if cond="{isRecent}"} <div class="date-time recent-time"> {timeSince} </div> {:else} <div class="date-time"> {timeSince} </div> {/if} <h2> <a href="{page.path}.html"> {articleTitle} </a> </h2> <p> {articleAbstract} </p> </article> </script> <script> jQuery(document).ready(function () { jQuery('#17f25cff-3361-4944-9482-9e5a8e2dd934').breakingnews({componentPath: '/content/jofa-home/jcr:content/advertisement-section/breakingnews', locale: "en", currentPath: "/news/2024/jul/broker-dealer-audit-deficiencies-on-the-rise-pcaob-finds"}); }); </script> </div> </div> </div> </div> </div> </div> <div class="row clearfix content content-two-col"> <div id="mainbar-top" class="col-sm-8 mainbar mainbar-top"> <ol class="breadcrumb"> <div class="articlebreadcrumb psuedobreadcrumb"><li><span class='psuedobreadcrumb-style-blue'>News</span></li><li class='active'>AUDIT & ASSURANCE</li></div> </ol> <div class="contentSectionArticlePage parsys"><div class="article section"><h1>Broker-dealer audit deficiencies on the rise, PCAOB finds</h1> <strong>By Bryan Strickland</strong> <br/> <div class="date-time" data-time="2024-07-29T15:28:27.000-04:00"></div> <br /> <div class="sharethis"><div class="social-share"> <div class="addthis_inline_share_toolbox"></div></div></div> <div class="row"> <div class="col-xs-5 article-sidebar"> <div class="articleSidebarParsys parsys"><div class="relatedarticles section"><div class="related-topics" data-event=""> <span>Related</span> <div id="d6c89b09-d74c-42a7-9728-3036230f0a39"></div> </div> <script type="text/x-template" id="related-articles-template"> {#.} <article> {@if cond="{isRecent}"} <div class="date-time recent-time"> {timeSince}</div> {:else} <div class="date-time"> {timeSince}</div> {/if} {@if cond="{isCGMA}"} <h2> <a href="{page.path}.html" track-event="you may also like click" track-youMayAlsoLikeLink="{articleTitle}">{articleTitle}</a> </h2> {:else} <h2> <a href="{page.path}.html">{articleTitle}</a> </h2> {/if} </article> {/.} </script> <script> $(document).ready(function () { $('#d6c89b09-d74c-42a7-9728-3036230f0a39').relatedarticles({ componentPath: "/content/jofa-home/news/2024/jul/broker-dealer-audit-deficiencies-on-the-rise-pcaob-finds/jcr:content/contentSectionArticlePage/article/articleSidebarParsys/relatedarticles", isCGMA: "false" }); }); </script> </div> <div class="articletopics section"><div class="related-topics" data-event=""> <span>TOPICS</span> <ul class="no-bullets"> <li><a href='/topics/topic-results.jofa.accounting-and-financial-reporting.html'>Accounting & Reporting</a></li><li><a href='/topics/topic-results.jofa.auditing.html'>Audit & Assurance</a></li><ul> <li><a href='/topics/topic-results.jofa.auditing.performing-an-audit.html'>Audit</a></li></ul> </ul> </div> </div> </div> </div> <div class="article-content"> <div class="articleparsys parsys"><div class="htmlContainer section"><div id="a7fc63cf-fd81-42f6-98bf-72c6e7f97151" class="htmlContainer section default"> <p>An annual PCAOB report details an increase in the percentage of broker-dealer financial reports with audit deficiencies and offers perspective on the nature of the deficiencies and advice for avoiding future occurrences.</p> <p>According to the <a href="https://assets.pcaobus.org/pcaob-dev/docs/default-source/inspections/documents/2023-broker-dealer-annual-report.pdf" target="_blank"><i>Annual Report on the Interim Inspection Program Related to Audits of Brokers and Dealers</i></a>, PCAOB staff identified at least one deficiency in 70% of the 103 audit engagements reviewed during 2023, an increase from 56% the previous year.</p> <p>Fifty-nine percent of the audits performed by the four largest firms inspected (firms that audited more than 100 broker-dealers and more than 100 issuers) had at least one deficiency, below the overall percentage but an increase from 33% in 2022. Ninety percent of audits performed by firms being inspected for the first time had at least one deficiency.</p> <p>The PCAOB determined that 56% of the 103 audits inspected had deficiencies related to the sufficiency or appropriateness of evidence that firms obtained to support their audit opinions. The most common area for deficiencies of that nature was revenue, followed by evaluating audit results (which primarily concerns the presentation and disclosure of broker-dealer financial statements); net capital; and related party relationships and transactions.</p> <p>The report, and a companion resource (<a href="https://assets.pcaobus.org/pcaob-dev/docs/default-source/inspections/documents/2023-broker-dealer-supplementary-information.pdf" target="_blank"><i>Supplementary Information Related to Audits of Brokers and Dealers</i></a><i>)</i> delve into a percentage increase in related attestation engagements with deficiencies.</p> <p>Based on the PCAOB's findings, the annual report offers some hypothetical scenarios that highlight good practices for avoiding deficiencies. That guidance, according to a news release, focuses on several areas where problems are persistent:</p> <ul> <li>Auditing considerations regarding use of a service auditor's SOC 1 report to obtain evidence of the design and operating effectiveness of certain controls at a service organization;</li> <li>Testing relevant assertions for investment advisory fee revenue;</li> <li>Enhancing procedures for examining journal entries and other adjustments for evidence of possible material misstatement due to fraud; and</li> <li>Enhancing focus on required communications to the broker-dealer's audit committee (or equivalent) and management.</li> </ul> <p>Last week, the PCAOB also <a href="https://pcaobus.org/documents/generative-ai-spotlight.pdf" target="_blank">released a report</a> examining the evolving integration of generative artificial intelligence in audits and financial reporting.</p> <h2><b><span class="primary-section-sub-heading-style">AICPA & CIMA RESOURCES</span></b></h2> <ul> <li><a href="https://www.aicpa-cima.com/cpe-learning/publication/brokers-and-dealers-in-securities-accounting-guide">Accounting guide for brokers and dealers in securities</a></li> <li><a href="https://www.aicpa-cima.com/resources/landing/expert-panel-stockbrokerage-and-investment-banking">Expert panel on stockbrokerage and investment banking</a></li> </ul> <p><i>— To comment on this article or to suggest an idea for another article, contact Bryan Strickland at </i><a href="mailto:Bryan.Strickland@aicpa-cima.com"><i>Bryan.Strickland@aicpa-cima.com</i></a><i>.</i></p> <script> jQuery(document).ready(function () { jQuery('#a7fc63cf-fd81-42f6-98bf-72c6e7f97151').htmlcontainer(); }); </script> </div> </div> </div> </div> </div> <script> //If there is no content in the article sidebar, hide the parsys to maintain the article styles jQuery(document).ready(function() { jQuery('.parsys.articleSidebarParsys').hideElementParentIfNoContents(); }); </script> <div class="hidden inpage-ad-ids" data-id="jofa-adslot-5"></div> <div class="hidden inpage-ad-ids" data-id="jofa-adslot-6"></div> <div class="hidden inpage-ad-ids" data-id="jofa-adslot-7"></div> <div class="hidden inpage-ad-ids" data-id="jofa-adslot-8"></div> <div class="hidden inpage-ad-ids" data-id="jofa-adslot-9"></div> <div class="hidden inpage-ad-ids" data-id="jofa-adslot-10"></div> <div class="hidden inpage-ad-ids" data-id="jofa-adslot-11"></div> <div class="hidden inpage-ad-ids" data-id="jofa-adslot-12"></div> <script type='text/javascript'> jQuery(document).ready(function() { jQuery().renderInPageAds(7, 4); }); </script> </div> </div> </div> <div id="sidebar-top" class="col-sm-4 pull-sm-right sidebar sidebar-top"> <div class="row clearfix"> <div class="sidebar-top iparsys parsys"><div class="section"><div class="new"></div> </div><div class="iparys_inherited"><div class="sidebar-top iparsys parsys"><div class="doubleclickAds section"><div class="advertisement"> <div id="jofa-adslot-2"> <script type="text/javascript"> googletag.cmd.push(function () { googletag.display('jofa-adslot-2'); }); </script> </div> </div> <br> </div> <div class="latestnews section"><div id="7bca46f6-afbc-463a-bf3e-e53f6dff44da" class="col-sm-8 col-md-12 latest-news no-column" data-event="newspodcast"> <div class="section-header">Podcast</div> </div> <script type="text/x-template" id="latest-news-template-7bca46f6-afbc-463a-bf3e-e53f6dff44da"> <article> {@if cond="{isRecent}"} <div class="date-time recent-time"> {timeSince} </div> {:else} <div class="date-time"> {timeSince} </div> {/if} <h2> <a target="" href="{page.path}.html">{articleTitle}</a> </h2> </article> </script> <script> $(document).ready(function () { $('#7bca46f6-afbc-463a-bf3e-e53f6dff44da').latestnews({componentPath: "/content/jofa-home/news/jcr:content/sidebar-top/latestnews", columnCheck: false, viewUrl: "/", viewLabel: "View More", locale: "en", displayAbstract: false, displayViewMore: false, templateId: "#latest-news-template-7bca46f6-afbc-463a-bf3e-e53f6dff44da" }); }); </script> </div> <div class="doubleclickAds section"><div class="advertisement"> <div id="jofa-adslot-3"> <script type="text/javascript"> googletag.cmd.push(function () { googletag.display('jofa-adslot-3'); }); </script> </div> </div> <br> </div> </div> </div> </div> </div> </div> <div class="hidden-xs col-sm-12 col-md-8 feature-ribbon"> <div> <div class="feature-carousel iparsys parsys"><div class="section"><div class="new"></div> </div><div class="iparys_inherited"><div class="feature-carousel iparsys parsys"><div class="featurecarousel section"><div id="feature-ribbon" class="feature-ribbon" data-event="featurescarousel"> <div class="featureTitle">Features</div> <div class="swiper"> <a class="icon-prev" href="#"></a> <a class="icon-next" href="#"></a> <div class="swiper-container"> <div class="swiper-wrapper"></div> </div> </div> <hr> </div> <div id="d43aaea0-83dc-432b-854c-bc0eaf686aa6"></div> <script type="text/x-template" id="feature-carousel-template"> <div class="swiper-slide"> <figure> <a href="{page.path}.html"> <div data-picture data-alt='{featureImage.alt}'> {@ne key="{featureImage.renditions.default}" value=""} <div data-src='{featureImage.renditions.default}' data-media></div> <img src='{featureImage.renditions.default}' alt='{featureImage.alt}'> {/ne} {#featureImage.renditions.breakpoints} <div data-src="{path}" data-media="{media}"></div> {/featureImage.renditions.breakpoints} </div> </a> <figcaption> <a href="{page.path}.html">{articleTitle}</a> </figcaption> </figure> </div> </script> <script> jQuery(document).ready(function () { jQuery('#d43aaea0-83dc-432b-854c-bc0eaf686aa6').closest('.featurecarousel').featurecarousel({componentPath: '/content/jofa-home/jcr:content/feature-carousel/featurecarousel'}); }); </script> </div> </div> </div> </div> </div> </div> <div class="clearfix visible-md-block visible-lg-block"></div> <div id="sidebar-bottom" class="col-sm-4 pull-sm-right sidebar sidebar-bottom"> <div class="row"> <div> <div class="sidebar-bottom iparsys parsys"><div class="section"><div class="new"></div> </div><div class="iparys_inherited"><div class="sidebar-bottom iparsys parsys"><div class="doubleclickAds section"><div class="advertisement"> <div id="jofa-adslot-4"> <script type="text/javascript"> googletag.cmd.push(function () { googletag.display('jofa-adslot-4'); }); </script> </div> </div> <br> </div> </div> </div> </div> </div> </div> </div> <div id="mainbar-bottom" class="col-sm-8 mainbar mainbar-bottom"> <div class="row"> <div class="col-md-6 special-report"> <div> <div class="specialreport iparsys parsys"><div class="section"><div class="new"></div> </div><div class="iparys_inherited"><div class="specialreport iparsys parsys"><div class="htmlContainer section"><div id="abb34299-9bc5-400b-92ce-413d740d5f0d" class="htmlContainer section "> <p><span class="primary-section-heading-style"><b>SPONSORED REPORT</b></span></p> <h2><a href="https://www.journalofaccountancy.com/info/joa-2024-tax-season.html"><img class="pull-left" src="https://www.journalofaccountancy.com/content/dam/jofa/issues/2024/oct/getting-clients-ready-for-tax-season-128x128.jpg"></a><span class="primary-section-sub-heading-style"><a href="https://www.journalofaccountancy.com/info/joa-2024-tax-season.html">Be prepared for tax season early</a></span></h2> <p>Our expert tax report highlights the important issues that tax preparers and their clients need to address for the 2024 tax year. Stay informed and proactive with guidance on critical tax considerations before year-end.</p> <script> jQuery(document).ready(function () { jQuery('#abb34299-9bc5-400b-92ce-413d740d5f0d').htmlcontainer(); }); </script> </div> </div> </div> </div> </div> </div> </div> <div class="hidden-xs col-md-6 sister-publications"> <div> <div class="sisterPublications iparsys parsys"><div class="section"><div class="new"></div> </div><div class="iparys_inherited"><div class="sisterPublications iparsys parsys"><div class="latestnews section"><div id="1e43372f-3a34-4f1f-9f56-d3746513c3ca" class="col-sm-8 col-md-12 latest-news no-column" data-event="ttafeed"> <div class="section-header">From <i>The Tax Adviser</i></div> </div> <script type="text/x-template" id="latest-news-template-1e43372f-3a34-4f1f-9f56-d3746513c3ca"> <article> {@if cond="{isRecent}"} <div class="date-time recent-time"> {timeSince} </div> {:else} <div class="date-time"> {timeSince} </div> {/if} <h2> <a target="_blank" href="{externalizedPath}.html">{articleTitle}</a> </h2> </article> </script> <script> $(document).ready(function () { $('#1e43372f-3a34-4f1f-9f56-d3746513c3ca').latestnews({componentPath: "/content/jofa-home/jcr:content/sisterPublications/latestnews", columnCheck: false, viewUrl: "https://www.thetaxadviser.com/", viewLabel: "View More", locale: "en", displayAbstract: false, displayViewMore: false, templateId: "#latest-news-template-1e43372f-3a34-4f1f-9f56-d3746513c3ca" }); }); </script> </div> </div> </div> </div> </div> </div> </div> </div> <div class="hidden-xs col-sm-12 col-md-8 magazine-ribbon"> <div> <div class="magazine-carousel iparsys parsys"><div class="section"><div class="new"></div> </div><div class="iparys_inherited"><div class="magazine-carousel iparsys parsys"><div class="magazinecarousel section"><div id="magazine-ribbon" class="magazine-ribbon" data-event="printcarousel"> <div class="magazineTitle">Magazine</div> <div class="swiper"> <a class="icon-prev" href="#"></a> <a class="icon-next" href="#"></a> <div class="swiper-container"> <div class="swiper-wrapper"></div> </div> </div> <hr> </div> <div id="93b7870a-3c20-43d5-b83c-b03c85c0ede6"></div> <script type="text/x-template" id="magazine-carousel-template"> <div class="swiper-slide"> <a href="{page.path}.html">{issueName}<br> <div data-picture data-alt='{issueCover.alt}'> {@ne key="{issueCover.renditions.default}" value=""} <div data-src='{issueCover.renditions.default}' data-media></div> <img src='{issueCover.renditions.default}' alt='{issueCover.alt}'> {/ne} {#issueCover.renditions.breakpoints} <div data-src="{path}" data-media="{media}"></div> {/issueCover.renditions.breakpoints} </div> </a> </div> </script> <script> jQuery(document).ready(function () { jQuery('#93b7870a-3c20-43d5-b83c-b03c85c0ede6').closest('.magazinecarousel').magazinecarousel( { componentPath: '/content/jofa-home/jcr:content/magazine-carousel/magazinecarousel', viewAllPath: '/issues', defaultImage: '/content/dam/jofa-test/general/JofA_Default_Mag_cover_small_official_blue.png' } ); }); </script> </div> </div> </div> </div> </div> </div> </div> </main> <footer class="container"> <div class="row social-media-connect"> <div class="hidden-xs col-sm-4 col-md-5"> <div class="promo-section-one iparsys parsys"><div class="section"><div class="new"></div> </div><div class="iparys_inherited"><div class="promo-section-one iparsys parsys"></div> </div> </div> </div> <div class="hidden-xs col-sm-4"> <div class="promo-section-two iparsys parsys"><div class="section"><div class="new"></div> </div><div class="iparys_inherited"><div class="promo-section-two iparsys parsys"><div class="htmlContainer section"><div id="394dec2b-32b6-4e06-9e01-1588b53bf699" class="htmlContainer section "> <p><span class="secondary-section-heading-style"><b>NEWS APP</b></span></p> <h2><a href="/info/add-journal-of-accountancy-to-apple-news.html"><img src="/content/dam/jofa/info/apple-news-icon.png" class="pull-left"><span class="secondary-section-sub-heading-style"></span></a><a href="/info/add-journal-of-accountancy-to-apple-news.html"><span class="secondary-section-sub-heading-style">How to add the <i>JofA</i> to your Apple News app</span></a></h2> <p>This quick guide walks you through the process of adding the <i>Journal of Accountancy</i> as a favorite news source in the News app from Apple.</p> <script> jQuery(document).ready(function () { jQuery('#394dec2b-32b6-4e06-9e01-1588b53bf699').htmlcontainer(); }); </script> </div> </div> </div> </div> </div> </div> <div class="col-sm-4 col-md-3"> <div class="promo-section-three iparsys parsys"><div class="section"><div class="new"></div> </div><div class="iparys_inherited"><div class="promo-section-three iparsys parsys"><div class="socialconnect section"><h3>CONNECT</h3> <ul class="no-bullets social-list img-list"> <li><a href="http://www.twitter.com/AICPA_JofA" target="_blank"><img src="/content/dam/jofa-test/social/twitter.png"/>Twitter</a></li> <li><a href="http://www.facebook.com/JournalofAccountancy" target="_blank"><img src="/content/dam/jofa-test/social/facebook.png"/>Facebook</a></li> <li><a href="http://www.linkedin.com/groups?mostPopular=&gid=160517" target="_blank"><img src="/content/dam/jofa-test/social/linkedin.png"/>LinkedIn</a></li> </ul> </div> </div> </div> </div> </div> </div> <div class="row footer-navigation footer-navigation-container"> <div class="col-sm-3"> <div class="footer-links-section-one iparsys parsys"><div class="section"><div class="new"></div> </div><div class="iparys_inherited"><div class="footer-links-section-one iparsys parsys"><div class="links section"><div class="verticallink-title">HOME</div> <ul class="no-bullets" data-event=""> <li><a href="/news.html"><span>News</span></a> <li><a href="/issues/2025/feb.html"><span>Magazine</span></a> <li><a href="/issues.html"><span>Issue library</span></a> <li><a href="/videos.html"><span>Video</span></a> <li><a href="/podcast.html"><span>Podcast</span></a> <li><a href="/newsletters/academic-update.html"><span>Academic Update</span></a> <li><a href="/topics.html"><span>Topics</span></a> <li><a href="/sitemap.html"><span>Site map</span></a> </ul> </div> </div> </div> </div> </div> <div class="col-sm-3"> <div class="footer-links-section-two iparsys parsys"><div class="section"><div class="new"></div> </div><div class="iparys_inherited"><div class="footer-links-section-two iparsys parsys"><div class="links section"><div class="verticallink-title">SUBSCRIBE</div> <ul class="no-bullets" data-event=""> <li><a href="/podcast.html"><span>Podcast</span></a> <li><a href="https://aicpa.qualtrics.com/jfe/form/SV_a3pWGGGXnmTbzBs"><span>Academic Update</span></a> </ul> </div> </div> </div> </div> </div> <div class="col-sm-3"> <div class="footer-links-section-three iparsys parsys"><div class="section"><div class="new"></div> </div><div class="iparys_inherited"><div class="footer-links-section-three iparsys parsys"><div class="links section"><div class="verticallink-title">ABOUT</div> <ul class="no-bullets" data-event=""> <li><a href="/info/contact.html"><span>Contact us</span></a> <li><a href="/info/advertise.html"><span>Advertise</span></a> <li><a href="/info/premium-advertiser-directory.html"><span>Vendor directory</span></a> <li><a href="/info/author-guidelines.html"><span>Submit an article</span></a> <li><a href="/info/editorial-calendar.html"><span>Editorial calendar</span></a> <li><a href="/info/reprints-copyrights.html"><span>Reprints & copyrights</span></a> <li><a href="https://www.aicpa-cima.com/help/privacy-policy"><span>Privacy policy</span></a> <li><a href="https://www.aicpa-cima.com/help/terms-and-conditions"><span>Terms & conditions</span></a> </ul> </div> </div> </div> </div> </div> <div class="col-sm-3"> <div class="footer-links-section-four iparsys parsys"><div class="section"><div class="new"></div> </div><div class="iparys_inherited"><div class="footer-links-section-four iparsys parsys"><div class="links section"><div class="verticallink-title">AICPA & CIMA SITES</div> <ul class="no-bullets" data-event=""> <li><a href="https://www.aicpa-cima.com/home"><span>AICPA-CIMA.com</span></a> <li><a href="https://www.aicpa-cima.com/help"><span>Global Engagement Center</span></a> <li><a href="https://www.fm-magazine.com/"><span><i>Financial Management</i> magazine</span></a> <li><a href="https://www.thetaxadviser.com"><span><i>The Tax Adviser</i></span></a> <li><a href="https://www.aicpa-cima.com/blog"><span>AICPA Insights</span></a> <li><a href="https://mycareer.aicpa-cima.com/jobs/"><span>Global Career Hub</span></a> </ul> </div> </div> </div> </div> </div> </div> <div class="row copyright"> <div class="col-sm-6"> <div class="copyright-section iparsys parsys"><div class="section"><div class="new"></div> </div><div class="iparys_inherited"><div class="copyright-section iparsys parsys"><div class="image parbase section"><div class="" data-event=""><a target="_blank" href="https://www.aicpa-cima.com"><img src="/content/jofa-home/_jcr_content/copyright-section/image.img.png/1682342069759.png" alt="AICPA & CIMA" title="AICPA & CIMA" class="cq-dd-image"></a></div> </div> <div class="copyright section"><div class="copyright component"> <div> <p><img src="/content/dam/jofa/info/clear-sq.png" alt="clear-sq" title="clear-sq" class="cq-dd-image"> © <span class="copyrightyear"></span> Association of International Certified Professional Accountants. All rights reserved.</p> </div> </div> <script type="text/javascript"> jQuery(document).ready(function () { jQuery('#a843da2f-fe39-4750-aa6a-5b1d695dbff1').copyright({componentPath: '/content/jofa-home/jcr:content/copyright-section/copyright'}); }); </script></div> </div> </div> </div> </div> <div class="col-sm-6"> <div class="footer-message-section iparsys parsys"><div class="section"><div class="new"></div> </div><div class="iparys_inherited"><div class="footer-message-section iparsys parsys"><div class="text parbase section"> <p style="text-align: right;"> <b>Reliable. Resourceful. Respected.</b></p> </div> </div> </div> </div> </div> </div> </footer> <script src="/etc/clientlibs/aicpa/assets.min.js"></script> <script src="/etc/clientlibs/aicpa/assets/cookie-banner.min.js"></script> <script src="/etc/clientlibs/aicpa/assets/components-footer.min.js"></script> <div class="ie-modal-parsys iparsys parsys"><div class="section"><div class="new"></div> </div><div class="iparys_inherited"><div class="ie-modal-parsys iparsys parsys"></div> </div> </div> </body> </html>

CINXE.COM

Broker-dealer audit deficiencies on the rise, PCAOB finds