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Broker-Dealer Audits: Overcoming Costly Deficiencies in PCAOB Examinations, Avoiding Sanctions

Addressing Auditor Independence, Related-Party Transactions, SEC Net-Capital Rules and More

Recording of a 110-minute CPE webinar with Q&A

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Conducted on Wednesday, January 23, 2019

Recorded event now available

or call 1-800-926-7926

This course will provide audit professionals and advisers with practical guidance for conducting broker-dealer audits, offering tools to avoid the most common and costly risk areas in broker-dealer audits as identified in PCAOB annual inspections. The panel will outline their experiences and practical approaches to prevent or resolve audit deficiencies.


On Aug. 20, 2018, the PCAOB issued its 2018 Inspection Brief detailing its evaluations of selected broker-dealer audits. While the PCAOB identified a decline in deficient audits and slightly fewer findings of independent auditor violations, the Board still noted that 91% of all broker-dealer audits contained deficiencies. In its report, PCAOB noted many material deficiencies that were fundamental to conducting audits, examinations or reviews.

PCAOB inspections will continue scrutiny of auditor independence; financial statement areas with recurring deficiencies; audit procedures for related party transactions; attestation engagement procedures; engagement quality review; and compliance with the newly updated Auditing Standard 2410 (AS 18).

Broker-dealer auditors are responsible for reporting to the SEC on material inadequacies and ensuring compliance with net capital and customer funds segregation rules. The SEC requires broker-dealer auditors to register with the PCAOB and to cooperate with regular inspections. Also, the SEC is enforcing amendments by PCAOB on its Rule 4003 audit inspection rules.

Listen as our panel of broker-dealer audit experts offers practical guidance on what PCAOB inspectors are looking for and the underlying reasons the inspectors will more heavily scrutinize certain areas. The program will discuss auditors' duties to maintain independence, assess risks of material misstatements due to fraud, and the use of confirmation technology to verify statements and arrangements.



  1. Securing your auditor and auditor credentials
  2. Broker-dealer audit inspection overview
    1. Relevant regulations
    2. 2019 inspection report findings
    3. Small Business Correction Act
    4. Broker-dealer audit issues
      1. Revenue
      2. Receivables
      3. Net Capital
      4. Review of Exemption Report
      5. Related-party transactions
      6. Responses to Fraud Risks
      7. Fair Value Measurements
  3. Best practices for audit preparation/effective pre-planning
    1. Look-back: what worked/did not from past season
    2. Effective Pre-planning
    3. Problem areas to address prior to year end
    4. How to prepare for areas of audit focus:
      1. Revenue
      2. Adopting new standards--for example leases
      3. Financial reporting
  4. Challenges to anticipate/practical solutions
    1. Contractual support (discuss each type of revenue stream)
    2. Reconciled schedules
    3. Use of an experienced FINOP
    4. Security of support
    5. Common plan broker-dealer errors and Potential fixes for errors
  5. Other Updates


The panel will review these and other notable issues:

  • Understanding the areas of highest risk in broker-dealer audits
  • Identifying and avoiding the most common mistakes in broker-dealer audits
  • Pinpointing solutions to the most common errors after the fact


Bennett, J. Bradley
J. Bradley Bennett
Vernon’s Gate Partners

Mr. Bennett served as EVP and Chief Enforcement Officer for FINRA for over six years. He has thirty years regulatory...  |  Read More

Cox, Robert
Robert H. Cox

Of Counsel
Briglia Hundley

Mr. Cox is a trial attorney with over two decades of experience litigating all types of business cases in courts across...  |  Read More

Richards, Steven
Steven E. Richards

Senior Managing Director
Ankura Consulting Group

Mr. Richards has over 20 years of experience involving internal and forensic accounting investigations and analysis,...  |  Read More

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