Julia Irvine 29 Jun 2017 10:57am

US watchdog slates standard of broker dealer audits

US watchdog the Public Company Accounting Oversight Board (PCAOB) has issued a damning staff inspection briefing about the standard of auditors of brokers and dealers in the US

It reveals continuing issues over auditor independence – with auditors involved in the preparation of the financial statements or accounting records of their clients, as well as repeated deficiencies in audit areas that have been flagged in previous inspections.

Of particular concern is the auditors’ failure sufficiently to assess the risks of material misstatement due to fraud, and relationships and transactions with related parties.

Other areas the PCAOB inspectors highlight include revenue recognition, and financial statement presentation and disclosures.

The watchdog decided to issue the staff inspection briefing ahead of publication of the actual annual report in August so that auditors of broker-dealers can take the comments and criticisms into consideration when planning and performing future audits.

The audit inspections were carried out during 2016. Inspectors visited 75 firms and inspected 115 audit and attestation engagements for fiscal years ending between 30 June 2015 and 30 June 2016.