Forum for auditors of broker-dealers to include discussion on inspection results

The PCAOB is scheduled to review its 2016 audit inspection results during a forum for auditors of broker-dealers in Las Vegas on Oct. 20, 2017.

The audit regulatory board recently released Annual Report on the Interim Inspection Program Related to Audits of Brokers and Dealers, which showed that auditors are continuing to have problems scrutinizing their broker-dealer clients’ financials.

The PCAOB’s inspection staff found problems at 73 of the 75 accounting firms serving securities brokers, according to the report. The 97 percent deficiency rate is slightly worse than the 96 percent deficiency rate for 2015 inspections, when problems were uncovered at 72 of 75 audit firms. The PCAOB inspected parts of 115 audit engagements and found problems with 96 of them, or 83 percent, which is an increase from 77 percent in 2015.

“The board continues to be concerned by the nature and number of deficiencies identified by the inspections,” the annual inspection report said. “Many of these deficiencies relate to the fundamentals of audit, examination or review procedures and are similar to those described in previous annual reports.”

The forum’s agenda also includes a discussion on auditor independence and professional skepticism. In 2016, PCAOB inspectors continued to find problems with independence as auditors were involved in the preparation of the financial statements or accounting records of their audit clients.

At the forum, the PCAOB staff also is planning to present a case study on auditing revenue. Inspection findings indicated that auditors have trouble evaluating the design of client’s internal controls intended to address fraud risks, contributing to deficiencies in testing revenue.

In addition, the PCAOB staff will provide updates on enforcements and audit standards.

Staff from the SEC and the Financial Industry Regulatory Authority (FINRA) are also scheduled to give presentations about their perspective of broker-dealers.

Another forum will be held in Jersey City, New Jersey, on Dec. 7.