Most Brokerage Audits Flagged for Violating Basic Standards

Faulty audits of brokerage firms climbed for the second year in a row as US accounting firms struggled to meet basic standards when vetting revenue and net capital, according to annual inspection results released on Thursday.

Inspectors found flaws in 70% of audits examined in 2023 for broker-dealer clients—firms that act as go-betweens for buyers and sellers of securities—according to a Public Company Accounting Oversight Board report summarizing the regulator’s findings. Violations among audits of listed companies also have risen in recent years.

In comparison, the board identified deficiencies in 58% of broker-dealer audits examined in 2022. Nearly half ...