The Public Company Accounting Oversight Board has adopted certain rules to implement provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act related to audits of securities brokers and dealers.
Specifically, the PCAOB adopted a temporary rule to establish an interim inspection program for registered public accounting firms’ audits of brokers and dealers. The PCAOB also adopted rules for assessing and collecting a portion of its accounting support fee from brokers and dealers to fund PCAOB oversight of audits of brokers and dealers, consistent with the Dodd-Frank Act. The PCAOB also adopted certain amendments to existing funding rules for issuers.
The Dodd-Frank Act authorized the PCAOB to establish, by rule, a program of inspection of auditors of brokers and dealers. The law leaves to the PCAOB, subject to the approval of the SEC, important questions concerning the scope of the program and the frequency of inspections, including whether to differentiate among categories of brokers and dealers and whether to exclude from the inspection program any categories of auditors.
The temporary rule adopted by the PCAOB provides for an interim inspection program while the PCAOB considers the scope and other elements of a permanent inspection program.
Under the temporary rule, the PCAOB will begin to inspect auditors of brokers and dealers and identify and address with the registered firms any significant issues in those audits. The PCAOB also expects that insights gained through the interim program will inform the eventual determination of the scope and elements of a permanent program, and the PCAOB expects to propose rules governing the scope and elements of a permanent program in 2013.
During the interim program, the PCAOB will provide public reports on the progress of the interim program and significant issues identified. In the absence of unusual circumstances, however, the PCAOB will not issue firm-specific inspection reports before inspection work is performed under the permanent program and will not issue firm-specific inspection reports on any firms that are eventually excluded from the scope of the permanent program.
The temporary rule does not change anything about the rules or standards that govern audits of broker-dealers. As the SEC has previously explained, its rules continue to require those audits to be carried out under GAAS, or generally accepted auditing standards.