In the first review of broker audits the US
Public Company Accounting Oversight Board (PCAOB) found most
statements lacked proper review before being signed off.
As part of its interim inspection program,
PCAOB reviewed 23 audits of SEC-registered brokers and dealers
undertaken by ten firms whose names have not been disclosed.
The nature and extent of the initial
inspections are of concern to the PCAOB and board member Jeanette
Franzel said the results are “disturbing”.
PCAOB has found audit deficiencies in three
main areas: the observance of customer protection and net capital
rules; audits of financial statements; and failures to comply with
auditor’s independence requirements.
However the findings cannot be generalised to
all securities broker and dealer audits as they “represent only a
small proportion of the inspections planned for the interim
program,” PCAOB chairman James Doty said.
The PCAOB expects to review around 100 audit
firms in 2013.
In 2011 the US watchdog was empowered to
expand it oversight authority over auditors of broker and dealers
in compliance with the Sarbanes-Oxley Act.