Jen: This is the PKF Texas Entrepreneur’s Playbook. I’m Jen Lemanski, and I’m here today with Marty Lindle, a Director in our Audit department and one of the faces of PKF Texas’ Broker-Dealer team. Marty, welcome back to The Playbook.
Marty: Thanks, Jen. Thanks for having me.
Jen: I know that the PCAOB recently released their eighth annual report on the interim inspection program for auditors. Can you give us an overview of what’s in this report?
Marty: The inspection program came about after the Madoff scandal in 2010. After that, the Dodd-Frank Act gave the PCAOB the authority to regulate broker-dealer auditors. They began inspecting firms in 2011 and issued their first findings in 2012. With that finding, they basically found 100% deficiency rate. After that, the law was changed to cause broker-dealers to be audited under the PCAOB standards instead of the AICPA standards.
Jen: And so, what does that actually mean? Why is that important for broker-dealers?
Marty: It’s important for broker-dealers, because that’s what their auditors are going to be focused on. If you understand what their focus areas are, it can lead to a more efficient audit for yourself and probably reduce some costs.
Also, one of the main findings of the initial inspection was independence violations. That’s gone down quite a bit in the subsequent years, but you don’t want to have an independence violation, because that could cause you some regulatory scrutiny – and maybe even a re-audit.
Jen: Oh, my gosh. Well, we will definitely get you back to talk a little bit more about some trends that you’re seeing with this in the broker-dealer space. Does that sound good?
Marty: That sounds great.
Jen: Perfect. This has been another Thought Leader Production, brought to you by PKF Texas – The Entrepreneur’s Playbook. If you’d like more information about broker-dealers, visit PKFTexas.com. Tune in next week for another chapter.