PCAOB Adopts Standards For Broker-Dealer Audits

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The Public Company Accounting Oversight Board, or PCAOB, adopted two attestation standards pertaining to audits of brokers and dealers. The PCAOB also adopted an auditing standard applicable when auditors are engaged to perform audit procedures and report on supplemental information that broker-dealers and others file with the SEC. Finally, the Board adopted related amendments to other PCAOB standards.

The two attestation standards cover the auditor’s examination of compliance reports and the auditor’s review of exemption reports. The requirements for broker-dealers to prepare compliance or exemption reports, and for PCAOB-registered auditors to examine or review such reports, are new requirements included in the SEC’s recent amendments to Exchange Act Rule 17a-5. The compliance and exemption reports contain statements made by broker-dealers regarding compliance with key SEC financial responsibility rules, including those involving the safekeeping of customer assets or with applicable conditions for exemption.

Consistent with the requirements of Rule 17a-5, the attestation standards establish requirements for auditors examining certain statements in broker-dealer compliance reports and reviewing statements in broker-dealer exemption reports.

The supplemental information standard establishes the auditor’s responsibilities when engaged to perform audit procedures and report on supplemental information that accompanies the audited financial statements. Supplemental information includes the supporting schedules that broker-dealers are required to file with the SEC.