PCAOB Shines Light on Broker-Dealer Auditors in Latest Publication
September 11, 2025
The Public Company Accounting Oversight Board on Thursday released a new staff publication for auditors of broker-dealers containing advice on exemption report reviews.
Broker-Dealer Audit Focus: Review Engagements Regarding Exemption Reports is the first edition of a new series, “Broker-Dealer Audit Focus,” that aims to provide easy-to-digest information to broker-dealer auditors.
Under federal law, the PCAOB has the responsibility to oversee firms that audit broker-dealers registered with the Securities and Exchange Commission.
The publication comes as PCAOB staff continues to identify deficiencies related to the review procedures required by Attestation Standard No. 2, Review Engagements Regarding Exemption Reports of Brokers and Dealers. This standard establishes requirements that apply when an auditor is engaged to perform a review of the statements made by a broker-dealer in an exemption report prepared pursuant to SEC rules.
According to the PCAOB, common deficiencies observed in auditors’ work include:
Not obtaining an understanding of the exemption conditions that are relevant to the broker-dealer’s assertions.
Not evaluating evidence that the exemption provisions in broker-dealer exemption reports were inaccurate, such as erroneous descriptions of exemptive provisions.
Not properly applying the requirements of prompt transmittal when assessing whether customer checks received by the broker-dealer should have been reported as exceptions.
Not performing inquiries regarding controls in place to maintain compliance with exemptions claimed, and those regarding the nature, frequency, and results of related monitoring activities.
Not evaluating whether evidence obtained in connection with the audit of the financial statements contradicted broker-dealer assertions.
Not correctly identifying in the audit firm’s review report the assertions made by the broker-dealer in its exemption report.
Not obtaining one or more required written representations required by Attestation Standard No. 2 from management of the broker-dealer.
In addition, this edition of “Broker-Dealer Audit Focus” highlights key reminders for auditors from Attestation Standard No. 2 and shares good practices that PCAOB staff has observed.
Auditors can find more resources and perspectives on the PCAOB’s Information for Auditors of Broker-Dealers, Information for Smaller Firms, and Staff Publications pages.
[CPA Practice Advisor]
