Broker-Dealer Audits: PCAOB AS 1220 Engagement Quality Reviews

Documenting Reviewer's Qualifications, Evaluating Significant Judgments, Tying EQR to the Engagement Letter

A live 110-minute CPE webinar with interactive Q&A

Thursday, May 17, 2018

1:00pm-2:50pm EDT, 10:00am-11:50am PDT

or call 1-800-926-7926

This webinar will provide audit professionals and advisers with practical guidance for conducting engagement quality reviews (EQRs) on 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 discuss structuring the engagement letter to match the scope of the audit, detail best practices for documenting their EQR processes to comply with PCAOB AS 1220, and describe strategies for responding to PCAOB correspondence concerning EQR matters.


In the PCAOB’s latest inspection brief, issued Aug. 30, 2017, the Board identified its focus and objectives for audit inspections. As in its prior year briefs, PCAOB noted material deficiencies that occur year after year in broker-dealer audits. In particular, the Board identified an increase in defects arising from firms’ EQR. Over 55% of audit engagements inspected reported EQR deficiencies.

PCAOB Audit Standard 1220 requires EQRs to be performed by a partner or equivalent professional at a CPA firm, with the objective of evaluating “the significant judgments made by the engagement team and the related conclusions reached in forming the overall conclusion on the audit engagement.” The EQR must document that the reviewer has the requisite experience, competence and independence to form an overall conclusion as to the engagement’s quality.

The EQR process requires the reviewer to evaluate the significant judgments relating to the engagement planning. Crucial to that evaluation is ensuring that the engagement letter terms reflect the scope of the audit, as well as the auditing firm’s client acceptance and retention process. The 2017 report identified failures in evaluating the audit team’s significant judgments for the most pervasive deficiency in EQR inspections. Sanctions for EQR deficiencies can include financial penalties and suspension of PCAOB practice privileges.

Listen as our panel of broker-dealer audit experts offers practical guidance structuring PCAOB-compliant EQRs.



  1. AS 1220 requirements for engagement quality review
  2. Common areas of EQR deficiencies
  3. Tying EQR process to an engagement letter
  4. Documentation standards
  5. Sanctions
  6. Responding to inspection report alleging EQR deficiencies


The panel will discuss these and other important issues:

  • Tying the EQR to the engagement letter and audit scope documentation
  • Ensuring and substantiating that the engagement quality reviewer has sufficient experience, qualifications and independence to perform the review
  • Process for adding information to the audit report or engagement review after the documentation completion date
  • Pinpointing EQR deficiencies, particularly in the area of audit team’s exercise of significant judgment


Marshall, Richard
Richard D. Marshall

Katten Muchin Rosenman

Mr. Marshall focuses his practice on the representation of financial institutions and employees subjected to...  |  Read More

Allen, Catherine
Catherine Allen, CPA

Audit Conduct

Ms. Allen helps CPA firms understand their ethical responsibilities so they can manage their risks more effectively,...  |  Read More

Banerjee, Dave
Dave Banerjee

Dave Banerjee CPA

Mr. Banerjee’s practice is focused on advising financial service firms and investment advisors on complex...  |  Read More

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