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.

RESOURCES

Keeping you informed and prepared amid the coronavirus crisis

We’re gathering the latest news stories along with relevant columns, tips, podcasts, and videos on this page, along with curated items from our archives to help with uncertainty and disruption.

SPONSORED REPORT

Getting leases in line

ASC Topic 842 is a relatively simple standard that can mean profound changes for organizations with leases. This report examines what makes this standard challenging and describes new ways for CPAs to add value.