3 areas of top concern in broker-dealer audits

By Ken Tysiac

Independence issues identified in the PCAOB’s 2017 staff inspections fell compared with the previous year, according to a report the board released Monday.

But the percentage of firms found to have deficiencies in their audits dropped just slightly, to 91% (68 of 75), from 97% in the previous year. The board reported that many of the audit issues identified were fundamental to conducting audits, examinations, or reviews.

Inspectors identified auditing issues with the highest frequency in the following areas:

  • Auditing revenue.
  • Assessing and responding to risks of material misstatement due to fraud.
  • Auditing supplemental information for the customer protection rule.

The inspections also examined audit firms’ systems of quality control, where audit issues were found in areas such as exercising due professional care and performing engagement quality reviews.

Examining the annual report can help auditors evaluate their programs and procedures to prevent deficiencies in the future and improve audit quality, according to the PCAOB.

The report is based on PCAOB inspectors’ examinations of portions of 116 audits. Just four of the 48 audits examined for independence issues were found to have independence violations.

Ken Tysiac (Kenneth.Tysiac@aicpa-cima.com) is a the JofA’s editorial director.

Where to find July’s flipbook issue

The Journal of Accountancy is now completely digital. 

 

 

 

SPONSORED REPORT

Better decision-making with data analytics

Data analytics has become a hot topic, but many organizations have not yet managed to understand its potential, let alone put it to work. This report will take a deep-dive on how to best introduce or enhance the use of data in decision-making.