court technology

In today's rapidly evolving business landscape, boards of directors are more than just stewards of governance—they are the strategic compass guiding an organization toward enduring success. As the challenges facing companies grow increasingly complex, from disruptive technological trends to shifting societal expectations, the board's role has never been more critical.  

This series is designed to empower board members with the insights and tools necessary to navigate change with confidence. Our experts, each a leader in their respective fields, will share real-world examples, practical frameworks, and actionable advice in a Q&A format, and lessons learned from their personal and professional journeys.   

Learning and development: A culture of continuous improvement 

For the latest installment of our board leadership series, BerryDunn Learning Consultant, Michelle Holloway, shares insights on learning and development, including designing effective trainings, aligning courses with an organization’s goals, and getting buy-in from leadership.   

Q: Can you describe your approach to designing an effective training program for employees? What key steps do you follow from initial concept to delivery?    

A: At BerryDunn, we don’t currently have a standardized approach to training design, although this may be something on our future horizon. We tailor our training design to meet the distinct needs of each of our three learning consultants, ensuring that our approach is as unique as the audiences we serve. However, I have found that starting with the end in mind can be highly effective. This closely aligns with the Flipped Kirkpatrick method, in which you start by asking what results you want the training to achieve. This is where the bulk of the time can be spent, collaborating with stakeholders to clarify:  

• What is your “why?”  

• What change is your program trying to effect? (i.e., Are you trying to decrease errors? Increase sales? Improve customer/client satisfaction?) 

• How will success be measured? Is there a baseline of data to serve as your starting reference point? 

Q: How do you determine the learning objectives and goals for a training program?  

A: To ensure they are clear, measurable, and aligned with both organizational needs and learner expectations, there are several key steps involved:  

• Identify business needs: Understand the broader business goals and how the training program can support these objectives to help ensure that the training is both relevant and impactful.  

• Conduct a training needs analysis: Use surveys, performance data analysis, observations, and interviews to assess the current skills and knowledge of the learners to identify gaps.  

• Define desired outcomes: Clearly articulate what you want learners to achieve by the end of the training, making these outcomes specific and aligned with the identified business needs.  

• Prioritize objectives: Determine which objectives are most critical to achieving the desired outcomes and focus on those to help create a more targeted and effective training program.  

• Test and refine: Before finalizing, review the objectives with stakeholders and potential learners to make sure they are clear and achievable, and then adjust based on feedback. 

• Align with assessment methods: Make sure the objectives can be measured through appropriate assessment methods such as practical exercises, performance evaluations, knowledge retention quizzes, and behavioral assessments. 

Q: How do you balance theoretical knowledge with practical, hands-on training in your programs?  

A: This is a crucial aspect of creating effective learning experiences. Here are some strategies to achieve this balance:  

• Integrate real-world scenarios: Using case studies, simulations, and role-playing exercises to apply theoretical concepts to real-world situations helps learners connect the dots between theory-based knowledge and see the practical relevance of what they are learning.   

• Blended learning approach: Combine online theoretical modules with in-person or virtual hands-on sessions to allow learners to absorb the theory-based knowledge at their own pace and then apply and practice it in a guided, simulated environment.  

• Project-based learning: Assign projects that require learners to apply theoretical knowledge to solve real problems, encouraging critical thinking and practical application of knowledge.   

• Interactive workshops: Conduct workshops that mix lectures with interactive activities. For example, after a theoretical lecture, have learners participate in group discussions or hands-on labs to reinforce the concepts.  

• Feedback and reflection: Encourage learners to reflect on their practical experiences and provide feedback on how the theory helped or could be improved. This reflection helps solidify their understanding and application of the knowledge.  

• Mentorship and coaching: Post-training reinforcement is critical to knowledge retention and positive learner outcomes. One option would be to pair learners with mentors or coaches who can provide practical insights and guidance on applying theoretical knowledge in real-world contexts.   

Q: What considerations do you factor in when designing training for remote or hybrid teams compared to in-office teams?   

A: This involves several unique considerations to ensure effectiveness and engagement. Here are some key factors:  

• Accessibility: Ensure that all training materials are accessible to everyone, regardless of their location or abilities. This could include providing video transcripts, closed captions, and alternative formats like audio recordings.   

• Flexibility: Offer a mix of synchronous (live) and asynchronous (self-paced) training options. This can allow attendees to choose what works best for their schedules and learning preferences.   

• Engagement: Use interactive elements such as quizzes, polls, and virtual breakout rooms to keep remote learners engaged. Incorporating gamification and social learning opportunities can also help make learning fun while fostering interaction and motivation.   

• Technology: Ensure that the technology used for training is reliable and user-friendly. Be prepared to provide support and training, if needed, on how to use the necessary tools and platforms.   

• Communication: Use multiple channels like email, chat, and video calls to maintain clear and consistent communication throughout the training process. This helps to keep everyone informed, connected, and motivated.   

• Collaboration: Facilitate collaboration between remote and in-office employees through group activities and projects. This can be accomplished by using collaborative tools like shared documents and virtual whiteboards to drive teamwork.   

• Feedback and support: Provide opportunities for learners to give feedback on the training and offer support through mentors or coaches.   

By considering these factors, you can create a training program that effectively meets the needs of remote, hybrid, and in-office teams, while also ensuring that participants have a positive, productive learning experience.   

Q: What role does follow-up or continuous learning play in ensuring long-term success of a training program?   

A: Conducting follow-up and continuous learning is critical to learner retention and whether your training program will be successful or not. Follow-up activities will help reinforce the knowledge and skills acquired during training. Repetition and practice are critical to building muscle memory for long-term retention and ensuring learners can effectively apply what they’ve learned. Continuous learning opportunities, such as practical assignments, facilitate the transfer of skills from the training environment to the workplace. This helps learners integrate new skills into their daily work. Regular follow-up and practice boost learners’ confidence in their abilities, which, in turn, translates into better performance and a greater willingness to take on new challenges. Ongoing support and feedback mechanisms allow learners to identify areas for improvement, refine their skills, and achieve mastery and continuous professional development. Follow-up activities help keep learners engaged and motivated. Sustained engagement is vital for fostering a culture of continuous improvement within the organization. By incorporating follow-up and continuous learning into your training programs, you can ensure that the initial investment in training yields long-term benefits for both the individuals and your organization.   

Q: How do you ensure that leadership and senior management are aligned and supportive of the training initiatives you develop?   

A: Ensuring that leadership and senior management are aligned and supportive of training initiatives is critical to their success. Some strategies that have proven beneficial throughout my career include:   

• Align with organizational goals: Clearly demonstrate how the training will support the organization’s strategic goals. This helps leaders see the direct impact on business outcomes.  

• Engage early and often: Involve senior leaders from the beginning of the training development process and seek their input on key business challenges and how training can address them.  

• Identify an executive sponsor: Identify and engage an executive sponsor who can champion the training initiative. Optimally, this person should be respected within the organization and have a vested interest in the success of the program.  

• Provide data and metrics: Use data, when possible, to show the potential return on investment (ROI) of the training.  

• Regular updates and feedback: Keep leadership informed about the progress of the training by providing regular updates. Solicit feedback and adjust as needed to ensure alignment with their expectations.  

Adopting these strategies can help you secure the support and alignment of leadership, ensuring that your training efforts are well-received and effective.  

About Michelle 

Michelle Holloway joined BerryDunn's Learning and Development team as a Learning Consultant in August 2024. She is a transformational leader with over 15 years of adult learning experience and has earned a reputation for embracing challenges and driving operational excellence. Michelle honed her expertise in training program development and administration, encompassing strategy, budget planning, and team optimization. Her ability to build consensus among executive teams and stakeholders has consistently promoted transparency and influenced positive change. She excels at overseeing the development, implementation, and delivery of scalable programs that adapt to the evolving needs of the business. Michelle is adept at designing and facilitating highly effective training curricula across various modalities, including computer-based courses, web-based courses, interactive classrooms, and virtual webinars. Her collaborative approach with partners, stakeholders, and vendors ensures the successful execution of program strategies and plans. 

BerryDunn partners with organizations to create work environments where business success and personal growth coexist and where people are confident knowing their workplace positively contributes to their well-being. We take a comprehensive approach to our workforce and well-being work, considering how business needs, organizational capacity, and the employee experience work together to drive your business forward. Learn more about our workforce and well-being team and services.

When justice and public safety agencies embark on the journey to replace legacy systems—such as Court, CAD, RMS, JMS, or Mobile CAD systems—the road to implementation is often paved with complexity. One of the most overlooked yet critical aspects of a successful system replacement is the planning and documentation of interfaces and integrations. Without a clear understanding of how systems communicate and share data, agencies risk costly delays, change orders, and unmet expectations. 

As a Senior Consultant at BerryDunn, I’ve worked with municipal and county governments across the US to evaluate legacy systems, conduct SWOT analyses, and guide stakeholders through current- and future-state planning. This article focuses on one of the most pivotal elements of that process: ensuring interface and integration requirements are clearly defined and validated before issuing a Request for Proposal (RFP). 

Understanding justice and public safety system interfaces vs. integrations 

Before diving into planning, it’s important to distinguish between two commonly confused terms: interfaces and integrations. 

• An Application Programming Interface (API) is a tool that allows two applications to communicate. It defines how data is exchanged. 
• Integration, on the other hand, is the broader process of connecting systems to work together seamlessly. It may involve APIs, but also includes workflows, data synchronization, and user experience considerations. 

In short, APIs are the “how,” and integrations are the “what” and “why.” 

Step 1: Demonstrate existing interfaces and integrations 

One of the most effective ways to validate interface and integration requirements is through live demonstrations. Subject Matter Experts (SMEs) from each department should walk through how current systems interact. This helps confirm whether a connection is truly an interface or integration—or if it’s simply a workaround. 

These demos often reveal discrepancies between what stakeholders believe exists and what actually does. By observing real-time usage, consultants and clients can avoid assumptions that lead to costly change orders later. 

Update and validate requirements 

• After demonstrations, update the requirements list and circulate it among all stakeholders. Everyone should sign off on the final version before the RFP is issued. This ensures alignment and accountability. 
• Also, consider future-state needs. Are there new systems being introduced that will require additional interfaces? Are multiple jurisdictions involved that may need to share data? These questions must be answered early. 

Step 2: Require full cost disclosure in RFP responses 

When vendors respond to an RFP, they must include all interface and integration costs, even if they consider them optional. These should be listed as fixed costs, not estimates or “to be determined.” This prevents budget surprises and ensures the project scope is fully understood. 

Lock in interface development commitments 

• If a vendor proposes to develop a new interface, the cost and timeline must be clearly defined in the contract. Interface vendors should be involved in pre-contract meetings to confirm their ability and willingness to deliver. 

Secure stakeholder approval 

• Every department involved must review and approve the list of interfaces in the RFP response. This step is crucial for transparency and buy-in. 

Step 3: Reassess requirements after delays 

In some cases, there may be a significant delay—sometimes up to two years—between requirements gathering and vendor selection. Given how quickly technology evolves, these delays can render original requirements obsolete. 

Before finalizing a contract, revisit the list of interfaces and integrations. Have any systems changed? Are previously compatible vendors still viable? Has the agency adopted new software that requires additional connections? 

Consider reissuing the RFP 

• If the changes are substantial, it may be necessary to revise and reissue the RFP. While this can be time-consuming and may impact the project timeline, it’s often a better alternative than proceeding with outdated or incomplete requirements. 

Reevaluate costs 

• Delays can also affect pricing. Vendors may have updated their pricing models, or new integration methods may offer cost savings or improved functionality. A thorough review ensures the project remains both relevant and cost-effective. 

Clarity is the key to success in justice and public safety IT projects 

Replacing legacy systems is a major undertaking, and the success of such projects often hinges on the clarity and accuracy of interface and integration planning. By following a structured approach—validating current functionality, ensuring all costs are accounted for, and reassessing requirements when delays occur—agencies can avoid common pitfalls and set themselves up for a smoother implementation. 

About BerryDunn 

BerryDunn’s Justice and Public Safety consulting team partners with agencies nationwide to guide successful technology modernization efforts—from defining requirements and developing RFPs to system selection and implementation. With deep experience across courts, law enforcement, fire, corrections, and more, BerryDunn brings objective, vendor-neutral expertise to help clients identify the right solutions for their needs. Their approach combines stakeholder engagement, in-depth needs analysis, and a balance of business and technical insight to ensure systems are optimized for performance and adoption. By not partnering with hardware or software vendors, BerryDunn ensures recommendations are always in the client’s best interest. Learn more about our services and team. 

The One Big Beautiful Bill Act (OBBBA) introduces sweeping reforms to federal student aid programs, reshaping the financial landscape for higher education institutions and their students. From changes in loan borrowing limits and repayment structures to Pell Grant eligibility and institutional accountability, the OBBBA signals a new era of fiscal discipline and transparency in postsecondary education.

What’s changing for higher education under OBBBA?

The OBBBA affects nearly every aspect of federal student aid.

Key highlights include:

• The elimination of certain loan programs and the introduction of new borrowing caps
• A simplified repayment structure with fewer deferment options
• A new Workforce Pell Grant and revised eligibility criteria for traditional Pell Grants
• Updates to how financial need is calculated through FAFSA
• New accountability measures tied to graduate earnings and program performance
• A delay in enforcement of borrower defense and closed school discharge rules

These changes will require institutions to reassess financial aid strategies, update internal policies, and prepare for new reporting requirements. Our experts have created a detailed summary of the impacts on higher education institutions. Download the summary for complete details.

Guiding higher ed institutions through change

The OBBBA represents a paradigm shift in how higher education institutions manage federal aid, student debt, and program accountability. While the reforms aim to enhance fiscal responsibility and student outcomes, they also demand significant operational adjustments from colleges and universities. Institutions must prepare to navigate these changes with strategic foresight, ensuring compliance while continuing to support student success in an evolving financial aid landscape.

BerryDunn’s dedicated higher education team brings deep experience to both public and private colleges and universities, with a keen ability to analyze complex organizations and develop actionable strategies to better fulfill your mission. Learn more about our team and services.

For many hospitals and health systems implementing Electronic Health Record (EHR) systems, the "go-live" milestone is less of a celebration and more of a stumbling point—even when the implementation seemed like a triumph. Why does this happen? The truth is, go-live is just one of many milestones on the long ascent of your EHR journey.

The real aim of a large-scale EHR project isn’t simply to reach the summit and plant your flag. The goal is to operate the EHR effectively in daily life: gaining efficiencies, making clinical improvements, enhancing patient experience, and restoring or surpassing your previous financial benchmarks.

Climbing the EHR mountain 

Think of your EHR investment like climbing a formidable mountain. No climber sets out just to stand at the summit indefinitely. The true adventure is reaching the top and then making it safely back down—stronger, wiser, and with stories to tell. EHR go-live is that moment at the peak. The journey, however, is far from over.

Many organizations invest in an EHR and create plans that focus only on reaching the summit, neglecting the path home. This oversight leads to exhausted staff, inadequate post-go-live support, declining morale, finger-pointing, and a dangerous slide back into old habits—negating the entire reason for the climb.

Let's explore the unique perils that await after go-live, as hospitals trek from the summit back to normal operations. While there are hazards along the way, these strategies will help you stay on course and avoid danger.

Peril 1: Fatigue at the summit

Just as climbers expend their greatest energy reaching the top, so too do teams give their all in the final days before go-live—last tests, make-or-break decisions, intensive user training, and two weeks of command center operations. When the summit is reached, people are tired. They want to pause and catch their breath, leaving them vulnerable to mistakes.

Strategy: Guard against fatigue

• Set daily work-hour limits during command center operations and monitor total hours closely.
• Allow time for team members to recharge; consider rotating schedules so not everyone is off at once.
• Designate post-go-live reinforcements to relieve the primary climbers once the summit is reached.

Peril 2: Letting your guard down

It’s easy to feel safe once you’ve reached the summit. The command center closes, the vendor departs, and talk turns to optimization visits and transitioning to vendor support. But the path down the mountain—those crucial 6 to 12 months after go-live—can be treacherous.

Strategy: Stay vigilant on the descent

• Maintain a daily post-go-live huddle, even when the formal command center disbands. This continued cadence keeps eyes on the trail.
• Remind your team: the journey isn’t finished, and dangers still lurk.
• Resist vendor pressure to transition to support until your team truly feels ready – use your baseline KPIs to help determine when you are ready.

Peril 3: Running low on provisions

On a mountain, running out of food or water during the descent can be dire. In EHR projects, organizations can burn through financial reserves more quickly than expected—especially with extra testing, third-party support, or extended clinical coverage. After go-live, cash inflow can slow, leaving the organization scrambling for resources.

Strategy: Keep supplies in reserve

• Utilize both contingency funds (for known risks) and management reserves (for unknowns) throughout implementation and post–go-live.
• Monitor key financial indicators like days cash on hand and line of credit usage.
• Plan for the dual challenge of winding down the legacy AR while managing the new AR, allocating sufficient resources for both worlds.

Peril 4: Coming down too fast

Gravity aids your descent, but it also brings new dangers—slipping, speeding, and tumbling down the slope. In EHR go-lives, the “gravity” is the momentum of rapidly accumulating, unchecked transactions. A simple misstep—a missed billing or coding queue due to training gaps or configuration errors—can snowball into a labor-intensive recovery.

Strategy: Manage EHR gravity

• Identify and address transaction “snowballs” quickly. Know which reports to run and how to spot growing backlogs.
• Focus on fixing root causes, not just symptoms, to prevent further accumulation.
• Ensure your team is properly trained on critical workflows and have super users ready to provide targeted remediation.

Peril 5: Getting lost on the trail

Fatigue, a sense of accomplishment, and the illusion of safety can cause teams to lose track of their route. In the EHR world, this can mean ballooning AR, mounting DNFB, accumulating referrals, increasing provider pajama time, and lengthening patient wait times—often unnoticed until you’re deep in the woods.

Strategy: Stay on course with clarity 

• Chart your descent with clear KPIs for success and monitor them religiously.
• Seek outside perspectives—consult with your team, bring in experts, and never hike alone.
• Regularly stop to check your bearings using dashboards and visual indicators to ensure you’re on the right path.

Peril 6: Chasing perfection

Every climber dreams of the perfect ascent and descent—ideal routes, well-timed rests, and a flawless return. But rigidly sticking to a plan, especially when conditions change, can lead to greater risk. In EHR projects, this is most evident in the revenue cycle, where teams may become fixated on perfect claims and charges, ultimately slowing cashflow and putting the organization in jeopardy.

Strategy: Focus on progress, not perfection

• Emphasize continuous improvement rather than perfection. Revenue cycle performance doesn’t have to suffer after go-live—deficiencies can be addressed with proper planning, testing, and training.
• Avoid holding claims for unneeded double (or even triple) checks before submission; this creates unmanageable queues and delays.
• Focus on building robust edits and workflows that prevent defects, acknowledging that denials and rejections will occur, but can be minimized over time.

Thriving beyond EHR go-live

Being aware of the perils and the strategies to address them can help your team thrive through go-live and beyond. The true measure of success is not reaching the peak, but returning stronger—delivering thriving operations, satisfied patients, and healthy financial performance with your new EHR system.

The mountain is waiting. Plan your entire journey, and you’ll return home triumphant.

Fulfilling the promise of healthcare technology

BerryDunn has an objective and experienced team dedicated to healthcare IT, including clinicians, IT experts, and former department heads who have hands-on experience in implementing EHR, ERP, and other health IT systems successfully. Whether you need guidance through the entire process or have specific needs, we customize our services based on where you are today. Learn more about our team and services. 

The Public Company Accounting Oversight Board (PCAOB) has released its 2024 Annual Report on the Interim Inspection Program for audits of broker-dealers. This 10th annual report outlines persistent deficiencies in broker-dealer audits and attestation engagements. For management and audit committees, the report offers crucial insights into audit risks, regulatory expectations, and areas where stronger oversight is needed.

Persistent deficiencies raise oversight red flags

In 2024, the PCAOB inspected 60 accounting firms and reviewed 102 audits of broker-dealer financial statements. The PCAOB also examined 93 related attestation engagements—either examinations of compliance reports or reviews of exemption reports. The results were:

• 66% of broker-dealer audits had at least one deficiency related to audit evidence.
• 59% of compliance examinations and 42% of exemption reviews were found deficient.
• Deficiencies were most prevalent among smaller firms that audit fewer broker-dealers or issuers.

These statistics reflect a growing concern about audit quality in the broker-dealer space—and highlight where management and audit committees should be particularly vigilant.

Key areas of concern identified
 

1. Revenue recognition and accuracy

Deficiencies in auditing revenue were the most common and serious. This is nothing new, as revenue had been the area cited with the most deficiencies in the 2023 and 2022 reports as well. Of the 102 audits reviewed, 97 included revenue testing—nearly half (48%) had deficiencies.

Common problems included failure to:

• Verify the accuracy of commissions, advisory fees, 12b-1 fees, and merger/acquisition fees.
• Confirm that performance obligations were distinct and satisfied prior to revenue recognition (as required by ASC 606).
• Disaggregate revenue sources appropriately to reflect their nature and timing.
• Assess the classification and disclosure of revenue, including required qualitative information.
• Test the accuracy and completeness of third-party reports (e.g., clearing broker data) used in audit procedures.

For example, some firms did not test whether securities trade amounts and commission rates were accurate, nor did they evaluate whether revenue from variable annuity trails or 12b-1 fees should have been disaggregated. Others did not ensure advisory fee calculations were tied to accurate Assets Under Management (AUM) data or fee schedules.

Takeaway for management and audit committees:

Audit committees should confirm that revenue processes—including fee calculation, classification, and third-party data use—are well-documented and transparent. Management should ensure contracts and performance obligations are clearly delineated and that disclosures meet ASC 606 requirements. An ASC 606 practice aid, which walks management through the five-step revenue recognition process, can be useful to take inventory of the broker-dealer’s various contracts and how revenue from those contracts should be recognized in the financial statements. Such a practice aid can also prove useful in crafting ASC 606 disclosures.

2. Journal entry testing and fraud risk

Deficiencies in journal entry testing—critical for identifying and responding to fraud risk—were found in 18% of audits.

Common issues included:

• Failing to test the completeness of journal entry populations
• Selecting entries without considering fraud risk characteristics
• Reviewing listings but not examining supporting documentation
• Excluding flagged entries from testing without documented rationale
• Testing too few entries to provide sufficient audit assurance

The PCAOB specifically noted that many auditors failed to respond appropriately to the risk of management override of controls—a key component of fraud risk under PCAOB standards.

Takeaway for management and audit committees:

Ensure your auditors are applying rigorous, risk-based journal entry testing and that internal finance and compliance teams are involved in identifying and monitoring manual entries, especially at period end. Make sure that supporting documentation is retained for all posted journal entries. Also, ensure the journal entry posting process is clearly documented, including the types of journal entries that can be posted, by whom, and who the designated reviewer is. Having such a process clearly documented will make it easier for auditors to understand your broker-dealer’s journal entry process, which is a critical first step in effective journal entry testing.

3. Related party relationships and transactions

Deficiencies in this area were particularly concerning given the potential for misstatement or hidden liabilities. The PCAOB found that some auditors:

• Did not test allocations of revenues and expenses between broker-dealers and affiliates
• Failed to assess the financial capability of affiliates to cover material receivables
• Missed required disclosures of related party transactions under ASC 850

In one case, auditors accepted related-party expense allocations without verifying whether they were accurate, complete, or consistent with underlying agreements.

Takeaway for management and audit committees:

Ensure formal agreements with affiliates are in place and that intercompany transactions are reviewed regularly. If changes to related party transactions are made, these changes should be formally documented in the form of agreement amendments. If an allocation methodology, such as headcount or time studies, is used, broker-dealers must ensure this allocation methodology is thoroughly documented and followed. Disclosures about related parties must be clear and complete. Committees should confirm that auditors are probing related party risks—not just accepting management’s assertions.

Key areas of concern identified – examination engagements (compliance reports)

Of the 29 examination engagements reviewed, 59% had at least one deficiency. Common issues included:

• Incomplete testing of controls over compliance with SEC financial responsibility rules (e.g., the Net Capital Rule, Customer Protection Rule)
• Failure to evaluate the design and operation of controls with a review component (e.g., how management reviews reserve computations or account statements)
• Insufficient testing of IT general controls upon which other control procedures depended
• Lack of compliance testing over reserve account balances and the existence of securities held for customers
• Improper or missing representation letters from broker-dealer management
• Failure to issue modified opinions when material weaknesses in internal control over compliance (ICOC) existed

Takeaway for management and audit committees:

Engage in proactive conversations with your auditor about the internal controls they expect to see in place over the financial responsibility rules. Gain an understanding of your auditor’s testing approach, ensuring it aligns with the expectations of the PCAOB. Throughout the year, make sure sufficient documentation is retained so your auditor can easily test ICOC. Again, what is deemed sufficient should be determined through proactive conversations with your auditor.

Key areas of concern identified – review engagements (exemption reports)

Among the 64 review engagements evaluated, 42% had deficiencies. Key failures included:

• Inadequate understanding of the broker-dealer's exemption under Rule 15c3-3
• Insufficient inquiry into controls or monitoring practices related to exemption compliance
• Failure to test or inquire about the handling of customer checks to ensure prompt transmittal
• Errors or omissions in review reports—such as referencing assertions not made or failing to include required language

Takeaway for management and audit committees:

If your broker-dealer claims an exemption, ensure operational practices support that status. Review internal monitoring processes and make sure what is happening in practice aligns with your written supervisory procedures. If exceptions to your exemption status are identified, ensure they are promptly corrected and that your auditor is notified of the exception.

What you can do now

To help improve the quality of oversight:

• Engage in proactive dialogue with your auditor about the PCAOB’s findings and how they apply to your engagement.
• Assess your auditor’s broker-dealer experience—particularly if your firm is served by a smaller firm.
• Re-examine and test your internal controls over customer protection, capital computations, revenue recognition, and related-party arrangements.
• Strengthen audit committee oversight by requesting clear audit strategies, better documentation, and enhanced reporting on high-risk areas like revenue and related parties.
• Confirm that required auditor communications are received and appropriately documented.

Final thought

The PCAOB’s report is a call to action—not just for auditors, but for management and those charged with governance. As regulatory expectations continue to rise, management and audit committees must ensure that internal processes, control environments, and auditor relationships are all aligned to support accurate, transparent, and compliant financial reporting.

About BerryDunn

BerryDunn's financial services team understands the complex regulatory environment that broker-dealers operate in and provides practical solutions to help you stay ahead of requirements. From broker-dealer financial statement audits to tax preparation and compliance to consulting services, we tailor our services to meet your unique needs. Learn more about our team and services.