How Many PCAOB-Registered Firms Are Around and Why

Here’s a fun fact that might surprise you: The number of PCAOB-registered firms auditing broker-dealers has plummeted over the past 15 years — a dramatic shake-up in an industry that many assume stays static.

Regulatory complexity crushed most smaller players who couldn’t afford to become PCAOB experts overnight. Compliance got vicious. Mistakes became front-page disasters. Firms that used to dabble in investment management audits ran for the hills when they realized the specialized knowledge required just to survive.

What’s left behind is a much smaller group of battle-tested specialists who eat, sleep, and breathe this — and most importantly, know what they’re doing like the back of their hands.

The Shrinking Field of PCAOB Audit Firms for Broker-Dealers

The consolidation gets even more dramatic when you dig into the actual numbers. We’re witnessing one of the most significant market contractions in professional services history, and most fund managers have no idea it happened right under their noses.

From ~800 to ~300: A 15-Year Trend in Audit Firms

Back in 2011, approximately 800 PCAOB-registered firms were issuing audit reports for about 4,400 broker-dealers. Small CPA firms handled these audits under looser standards, treating broker-dealer work like any other engagement.

Fast-forward to 2023, and only 305 firms remained standing to audit roughly 3,400 broker-dealers.

In other words, as audit firms dropped by more than 60%, broker-dealer entities fell by just 23%, and regulatory tightening raised the bar into the stratosphere. Firms that couldn’t invest in specialized expertise got squeezed out entirely.

The Broker-Dealer Audit Shortage Crisis?

Here’s the reality: Only a few hundred PCAOB-registered firms worldwide can legally audit SEC-registered broker-dealers, while thousands of broker-dealer entities need these audits.

Most of these qualified firms are small, U.S.-based boutique operations that stepped in to fill the void when larger audit firms abandoned this specialized market. Since broker-dealers must file with the SEC, they’re limited to this already tiny pool of auditors.

This environment creates quite the supply-demand imbalance. Fewer auditors available each year due to ongoing consolidation means broker-dealers face rising audit costs and longer waits to secure audit services. Calling it an inconvenience is an understatement.

Engagement Volume Breakdown: Few Firms Handle Most Broker-Dealer Audits

Here’s where things get really interesting. Among those 305 PCAOB-registered firms, the distribution reveals a winner-take-all market:

80 firms audit exactly 1 broker-dealer each (one audit annually).
181 firms handle 2 to 20 audits annually.
30 firms handle 21 to 50 audits per year.
9 firms handle 51 to 100 audits annually.
Only 5 firms handle over 100 audits per year.

This breakdown shows that just 14 firms (5 + 9) conduct over 50 broker-dealer audits a year, putting them in the top tier by volume. These 14 high-volume firms — which represent roughly the top 4-5% of all broker-dealer auditors — collectively cover a large portion of the broker-dealer market. For context, the “Big Four” accounting firms plus a couple of specialized firms fall into the 100+ audits group, while the next 9 firms cover the 51-100 range.

Meanwhile, over 1,000 broker-dealers get audited by firms with 50 or fewer total clients and zero public company experience.

Why Are There So Few PCAOB Firms — 3 Key Reasons

Watching 500 audit firms vanish from an industry doesn’t happen by accident. Three powerful forces converged to create this massive shakeout, and once you understand what they were, you’ll get why finding an auditor is harder now. You’ll also see why that’s probably better for everyone.

Reason 1: Heightened Regulatory Oversight Thinned the Herd

The Dodd-Frank Act of 2010 changed everything for broker-dealer audits. The PCAOB extended its authority to cover broker-dealers, and by mid-2014, the SEC required all broker-dealer audits to meet PCAOB standards instead of basic AICPA guidelines.

Suddenly, every CPA firm auditing broker-dealers had to register with the PCAOB, undergo rigorous inspections, and follow much stricter auditing standards. Many smaller firms took one look at the new requirements and walked away from their broker-dealer clients entirely.

Others tried to stick it out but failed spectacularly. Early PCAOB inspection reports from 2011-2013 revealed widespread problems: independence violations, auditors preparing their clients’ financial statements, and inadequate testing of compliance rules. The regulatory hammer came down hard, and firms that couldn’t adapt got crushed or chose to exit before facing enforcement actions.

Reason 2: Specialized Knowledge and Complexity in Broker-Dealer Audits

Broker-dealer audits demand expertise that most generalist accountants simply don’t possess. These firms operate under specialized SEC and FINRA rules like Net Capital requirements, Customer Protection rules, and Reserve Formula calculations that bear zero resemblance to typical corporate audits. Auditors must master SEC Rule 15c3-1 and handle unique attestation engagements on compliance reports.

The PCAOB also found that many audit deficiencies stemmed from auditors’ insufficient understanding of broker-dealer industry rules and risks. Firms that only occasionally handled a broker-dealer client lacked the specialized training to meet these challenges consistently. Then, as regulations kept tightening, technical complexity increased, and broker-dealer audits became the exclusive domain of specialists.

Reason 3: Economics of Scale: Volume, Efficiency, and Quality Advantage

PCAOB-standard audits cost serious money to execute properly. Fixed costs include maintaining PCAOB registration, quality control systems, staff training on evolving rules, and preparing for inspections. Low-volume firms couldn’t justify these investments for just a handful of clients.

At the same time, PCAOB registered firms with a critical mass achieved economies of scale. They spread specialized technology costs, continuing education, and quality reviews across dozens of engagements while developing efficient broker-dealer methodologies.

Volume correlates directly with quality too. The PCAOB found that 90% of first-time inspected firms had deficiencies, while the largest firms auditing 100+ broker-dealers showed significantly lower deficiency rates. Scale breeds expertise and consistency that scattered, low-volume practices can’t match.

Michael Coglianese CPA, P.C.: A Top 3% Firm in the Sweet Spot

So, where does all this consolidation leave you? With fewer choices but potentially better outcomes. Michael Coglianese CPA, P.C. (MCCPA) survived the audit industry bloodbath and landed in the top 3% of all broker-dealer auditors by volume. We’re right in that sweet spot where experience meets efficiency without losing the personal touch that big firms sacrifice.

Elite Volume Experience: MCCPA ranks among only 14 firms nationwide performing over 50 broker-dealer audits annually. We’ve seen every possible compliance scenario, regulatory curveball, and financial structure quirk that broker-dealers can throw at auditors.
Economies of Scale That Benefit You: High audit volume creates efficiencies we pass directly to clients through streamlined processes, specialized tools, and templates built specifically for broker-dealers. You get cost-effective audits delivered on schedule without corners cut on quality.
Always Current on Regulatory Changes: Performing dozens of broker-dealer audits yearly forces us to stay ahead of evolving PCAOB standards and SEC requirements. We implement new rules before most firms even know they exist, so your audit stays compliant with the latest requirements.
Dedicated Broker-Dealer Focus: We specialize exclusively in broker-dealers and alternative investment entities instead of dabbling across industries. Our team masters Net Capital calculations, customer asset segregation, and FINRA reporting complexities that generalist auditors frequently miss or misunderstand.
Big-Firm Expertise with Boutique Attention: Operating in the top 3% by volume doesn’t make us an impersonal factory. We deliberately maintain that sweet spot where robust technical expertise meets hands-on senior attention and customized service approaches.

Where This Leaves You

After watching 500 audit firms disappear, you’re left with fewer choices but much better odds of finding genuine expertise. The regulatory upheaval eliminated every firm that couldn’t handle the complexity, leaving behind a concentrated group of specialists who’ve mastered broker-dealer compliance without breaking budgets or missing deadlines. Your selection pool got cut in half, but the quality bar went way up.

Michael Coglianese CPA, P.C., landed in the top 3% of this survivor group because we focused exclusively on our niche rather than trying to serve every industry. We handle over 50 broker-dealer audits annually, which means your compliance challenges are routine business for our team. While most firms still approach these engagements like complex puzzles they need to solve from scratch, we’ve developed efficient processes and deep regulatory knowledge from years of concentrated experience. We’ve streamlined the whole audit process and know exactly where regulators focus their attention.