Fact Sheet: Annual Report on the Interim Inspection Program for Auditors of Brokers and Dealers

August 18, 2016

The Public Company Accounting Oversight Board today issued an annual report on its interim inspection program for auditors of brokers and dealers.

The annual report describes results of inspections conducted in 2015, the first inspection year in which all inspected engagements were governed by the Securities and Exchange Commission's 2013 amendments to Exchange Act Rule 17a-5, including the new requirement that broker-dealer audits be performed in accordance with PCAOB standards. The report shows high levels of deficiencies similar to inspection results in previous years.

PCAOB inspectors identified deficiencies in the work of 96 percent of the audit firms inspected. Auditor independence appeared to be impaired in 7 percent of the inspected audits, compared to 25 percent in 2014.

The interim program began in the fall of 2011 in response to the PCAOB's new oversight authority provided in the Dodd-Frank Wall Street Reform and Consumer Protection Act. The Board began issuing annual reports on the interim program in August 2012.

Inspections of Registered Audit Firms in 2015

All of the audits covered by the 2015 inspections were required to be performed under PCAOB standards and rules. During 2015, the Board inspected 75 firms covering portions of 115 audits and the related attestation engagements. PCOAB inspectors identified:

The 2015 inspections also covered the auditor's examinations of broker-dealers' compliance reports and reviews of broker-dealers' exemption reports. Deficiencies were identified in the attestation engagements at 54 firms inspected and included the following:

Summary of Inspection Results Since Inception of the Interim Inspection Program

Since the inception of the interim inspection program, the PCAOB has performed 259 inspections of 210 firms that conducted audits of broker-dealers.

These inspections covered portions of 399 audits, of which 120 were required to be performed in accordance with PCAOB standards and 279 were required to be performed in accordance with GAAS. These inspections also included 118 attestation engagements that were required to be performed in accordance with PCAOB standards.

Inspections conducted through December 31, 2015 identified the following:

Next Steps for the Interim Inspection Program