Broker dealer audits are routine but essential for firms, helping ensure compliance and accuracy. As your audit approaches, vetting seasoned broker-dealer audit firms to select the best one is key to avoiding deficiencies and maintaining a solid regulatory standing.
According to the Journal of Accountancy, broker-dealer audit deficiencies are on the rise, making it even more important to work with an experienced audit firm to ensure the accuracy of your audits.
In this post, we’ll review a few common audit deficiencies so you can be better prepared to choose a PCAOB-registered firm.
PCAOB-Identified Deficiencies in Broker-Dealer Audits
Recently, the Public Company Accounting Oversight Board identified several common deficiencies found in broker-dealer audits. In fact, of the 103 audit engagements reviewed in 2023, nearly 70% of them had at least one deficiency.
So, what are those common deficiencies? According to the PCAOB, they are:
- Miscalculations in revenue
- Errors in the evaluation of audit results, particularly regarding the presentation and disclosure of financial statements
- Errors relating to net capital
- Deficiencies in party relationships and transactions
Some of these deficiencies are due to weak internal controls and improper initial documentation. Others are due to an auditor’s lack of knowledge and experience.
Depending on the deficiencies, broker-dealer audit firms might find that they carry regulatory penalties. Not only do those deficiencies carry fines and other financial penalties, but they also can have an impact on your firm’s reputation.
That’s why working with a PCAOB-registered audit firm is essential for your broker dealer audit.
How Top Broker-Dealer Audit Firms Can Avoid These Pitfalls
As a broker-dealer, you can help avoid some of these prevalent audit deficiencies. It starts with choosing a PCAOB-registered audit partner. Take the time to research your selected firm. Don’t be afraid to ask questions regarding the firm’s PCAOB registration and track record of addressing deficiencies. This will help you make a better, more informed decision when selecting broker dealer auditors.
It’s also important to recognize your selected audit firm’s communication levels. Are they proactive and ready to answer your questions or help you troubleshoot an area of concern? If so, you’re likely working with an auditing firm that will give you regular updates on your audit process.
Why Assurance Dimensions?
If you’re ready to get started partnering with an experienced audit firm, consider working with Assurance Dimensions. At Assurance Dimensions, we’re PCAOB-registered, and we’re proud of our deficiency-free track record in broker-dealer audits.
We also offer remote auditing services, making it even easier to communicate with your auditing professional. Contact us today to learn more about our remote auditing services.