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Broker-Dealer Audit and Attestation Standards Finalized

May 14, 2014

The PCAOB published its audit and attestation standards related to the Dodd-Frank Act. The standards, which were approved by the SEC in February, outline an auditor’s responsibility for the information that accompanies a broker-dealer’s audited financial statements; set rules for auditors examining broker-dealer compliance reports; and establish requirements for a review of a broker-dealer’s claim for an exemption from SEC reporting rules covering the safety of client assets.

The PCAOB on May 12, 2014, published the final auditing and attestation standards, and Dodd-Frank conforming amendments, for audits of broker-dealers.

Auditing Standard (AS 17) No. 17, Auditing Supplemental Information Accompanying Auditing Financial Statements, outlines an auditor’s responsibility for the information that accompanies a broker-dealer’s audited financial statements. The standard requires an auditor to provide sufficient evidence to express an opinion on whether the supplemental information is fairly stated. The PCAOB’s authority for supervising auditors of broker-dealers was established in the Dodd-Frank Act.

The SEC approved AS 17 when it issued Release No. 34-71525, Order Granting Approval of Proposed Rules, Auditing Standard No. 17, Auditing Supplemental Information Accompanying Audited Financial Statements, and Related Amendments to PCAOB Standards, in February.

Attestation Standard No. 1, Examination Engagements Regarding Compliance reports of Brokers and Dealers, sets rules for auditors examining broker-dealer compliance reports. Attestation Standard No. 2, Review Engagements Regarding Exemption Reports of Brokers and Dealers, establishes requirements for an auditor’s review of a broker-dealer’s claim for an exemption from SEC reporting rules covering the safety of client assets.

The attestation standards were approved by the SEC in Release No. 34-71524, Order Granting Approval of Proposed Rules, Standards for Attestation Engagements Related to Broker and Dealer Compliance or Exemption Reports Required by the U.S. Securities and Exchange Commission and Related Amendments to PCAOB Standards, in February.

AS 17 takes effect for reports on supplemental information that accompany financial statements for fiscal years ending on June 1, 2014, or later. Attestation Standard No. 1 and Attestation Standard No. 2 take effect for examination engagements and review engagements for fiscal years also ending on June 1 or later.

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