“This report presents observations from inspections of portions of 23 audits at ten firms conducted as part of the interim inspection program. The audits and firms selected are not necessarily representative of all broker and dealer audits and their auditors. The approach used in the selection of audits of brokers and dealers considered a number of different factors intended to provide the Board with information necessary to inform
future Board actions. This approach differs from the methodology used in the selection of audits of issuers by firms subject to regular inspection. The Inspections staff identified deficiencies in all of the audits inspected. While these results cannot be generalized to all broker and dealer audits, the nature and extent of the findings are of concern to the Board. Following is a summary of the deficiencies noted.”