ISLAMABAD: In the wake of recent broker defaults, the Securities and Exchange Commission of Pakistan (SECP) is critically reviewing the role of statutory auditors of brokerage houses.
In this regard, the SECP has sought information from six auditors to assess the audit quality, said a statement on Friday.
The 2015 Securities Act assigns certain specific responsibilities to statutory auditors of brokerage houses, in particular regarding client assets. It has been observed that some auditing firms are acting as statutory auditors for a large number of brokers. For example, two auditing firms are working as statutory auditors for about 100 brokers.
One of these firms had audited the accounts of three brokers who recently defaulted. As part of the ongoing inquiry against recently defaulted brokers, the conduct of the said auditing firm is also under scrutiny. Additionally, the SECP has started looking at financials of brokers audited by this firm.
The SECP Chairman has emphasized on statutory auditors to perform their duties in conformity with the law. He further said that the SECP would not shy away from initiating any stern legal actions against those auditing firms that fail to perform their functions with utmost diligence and strictly in accordance with the law.