Broker-Dealer Attest and Audit Standards has been Adopted by the PCAOB

Thursday, October 24, 2013 Print Email

One auditing standard and two attestation standards pertaining to audits of brokers and dealers were adopted by the Public Company Accounting Oversight Board (PCAOB).

The new auditing standard that the PCAOB has adopted is applicable when the auditors carry out audit procedures and report on the information that brokers and dealers file with the Securities and Exchange Commission (SEC).

The new attestation standards that have been adopted by the PCAOB are intended to help protect the customer funds by improving the quality of the information provided to the SEC. These attestation standards cover the auditors review of exemption reports and the auditor's examination of the compliance reports.

James Doty, the chairman of the PCAOB, stated on October 10, 2013 in his written statement that "The standards adopted today are an important step for the board's oversight of audits of broker-dealers authorized under the Dodd-Frank Act. They will strengthen procedures for auditors and improve the reliability of annual reports required by the SEC for oversight of customer assets held by broker-dealers."

The Dodd-Frank Act authorized the PCAOB to oversee the audits of brokers and dealers registered with the SEC. On July 30, 2013, the SEC approved that the audits of financial statements and related information of brokers and dealers should be conducted in compliance with the PCAOB standards. It also required that the auditor's review of the exemption report or the auditor's examination of compliance report should also be in accordance to the PCAOB standards. Previously, the audits of brokers and dealers were performed in accordance to generally accepted auditing standards.

The new auditing standard and the new attestation standards will be submitted to the SEC for approval. If they are approved by the SEC, they will be effective for the examination engagements and review engagements of the fiscal year ending on or after June 1, 2014.

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