Inspection finds flaws in audits of 23 brokerages - 13 WTHR Indianapolis

Inspection finds flaws in audits of 23 brokerages

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WASHINGTON -

A watchdog agency for the accounting industry says it's found numerous flaws in how some firms audited securities brokerages.

The five-month inspection by the Public Company Accounting Oversight Board covered a sample of 23 audits of brokerages done by 10 accounting firms. The inspection found deficiencies in all 23 audits. The report covered the board's first such inspection.

The auditing firms' lapses included a failure to adequately verify how much financial cushion the brokerages held against potential losses and the accuracy of revenue figures the brokerages provided.

The report didn't name the auditing firms or the brokerages whose audits were reviewed. But the brokerages whose audits were inspected are a small slice of the 4,400 or so brokerage firms registered with the Securities and Exchange Commission that serve individual and institutional investors.

The board said its inspection results show that some auditors weren't properly fulfilling their duty to provide an independent check on the brokerages.

(Copyright 2012 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.)

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