November 20, 2018

Broker-dealers

Anecdotal, Unverifiable Evidence Confirms That Broker-Dealer Audits Are as Bad as You Thought They Were

Digging through the mailbag, I found this little gem: I'm not surprised broker dealer audits are bad. I used to be on a high profile one and let me tell you I spent so much time to trying to understand the business. At the end of the day, you get a general idea as to the operations BUT […]

PCAOB’s Latest Report Finds That Auditors of Broker-Dealers Suck, Too

PCAOB Auditor Wrecking Ball Tour 2012 rolls on with the an interim report on the auditors of broker-dealers. And this time there's 100% deficiency!  From the Executive Summary of the Report on the Progress of the Interim Inspection Program Related to Audits of Brokers and Dealers:  This report presents observations from inspections of portions of […]

Broker-Dealers, Prepare Thyselves for More Intrusive Audits

SEC commissioners will vote today on proposed changes to broker-dealer auditing and reporting rules at a meeting in Washington. As with the 2009 rules, which tightened oversight of advisers’ custody of client assets after Bernard Madoff Ponzi scheme was exposed, the new changes increase oversight of the minority of about 300 broker-dealers who hold customers’ cash.

The proposals — which would be opened for a 60-day comment period — would require that a broker-dealer’s internal controls be checked by a registered public accounting firm and would let regulators examine the broker-dealer’s audits. Broker-dealers would have to file quarterly reports describing whether they have access to client money and how any access is controlled. [Bloomberg]

PCAOB Wants Broker-Dealers to Pony Up for the Privilege of Increased Enforcement

Yesterday, Caleb shared the details on a tentative new plan hatched by Dodd-Frank that would require nonpublic brokers and dealers to open their doors to that special brand of attention known as PCAOB inspections. We also learned that if the PCAOB gets their way, those special little broker-dealers will be asked to pony up the cash for the privilege of getting PCAOB patdowns.


Via Business Week:

The Public Company Accounting Oversight Board may require the biggest U.S. broker-dealers to pay more than $1 million a year to fund auditor inspections required under the Dodd-Frank Act.

PCAOB board members voted unanimously Tuesday to seek comment on the proposal, which would create a mechanism for raising the $15 million needed to perform reviews dictated by the financial- regulation overhaul enacted in July.

Unlike audit firms, of which 97% of the littler ones get constantly pestered by the PCAOB while the big boys get their boxes checked and can hit the ranges by noon for cocktail hour on the putting green, the new funding requirement would only affect 14 percent of broker-dealers large enough to meet the PCAOB’s tentative net-capital requirements.

These fees would account for seven percent of the PCAOB’s total funding, guesstimated terminally-acting PCAOB chair Dan Goelzer.

PCAOB board member Bill Gradison is sure that the PCAOB is serious about identifying issues and doing its job protecting the public or whatever the hell it is they are there to do. That means no working things out as they go, I suppose. He swears the interim inspection program is not “just a learning experience for the PCAOB” and “could have consequences for the firms involved.” That’s if anyone finds anything fishy, I am guessing.