Team of broker dealer auditors reviewing documents


New rules and regulations governing broker dealers have led to a complex environment of compliance. As a result, broker dealers require expert help from experienced broker dealer auditors. For your next broker dealer audit, ask these 6 questions to your auditor to make sure your audit goes smoothly and meets deadlines.


Do I Need An Annual Broker Dealer Audit?

According to the Securities and Exchange Act of 1934 (SEA), every registered broker or dealer must file an annual report.  Members must submit their annual reports to the Financial Industry Regulatory Authority (FINRA), Securities and Exchange Commission (SEC), and Securities Investor Protection Corporation (if applicable). SEA Rule 17a-5(d) provides specifics for filing annual reports.


Do Broker Dealer Auditors Need To Have Specialized Experience? 

Due to The Dodd-Frank Act and the complex nature of regulation to certify audits, all broker dealer audit reports filed to the SEC need to be prepared by a PCAOB-registered public accounting firm.


When Do I Need to File My Audit?

The standard deadline for filing your annual broker dealer audit is no later than 60 days after the end of the fiscal year. For example, if the year-end is December 31, 2021, the annual audit is due to regulators on or before March 1, 2022. There may be additional extensions available depending on circumstances that can be discussed with your auditor.

Given this tight deadline contact your auditor to ensure the audit is scheduled early with proper planning time to avoid any delays in meeting the deadline.


How Do Net Capital Requirements Apply to My Firm?

The Net Capital Rule (SEC Rule 15c3-1) requires broker dealer firms to have and maintain at all times a net capital at specific levels to protect customers and creditors from monetary losses that occur when firms fail. Your broker dealer audit will involve performing substantive tests to ensure you have the required financial assets. To avoid a violation of the net capital rules and a reclassification, consult with an experienced PCAOB certified auditor.


What Do I Need To Know About FOCUS Reports?

Every broker dealer is required to prepare a net capital computation within 17 business days of month-end (SEC rule 17a-5). This report is called a Financial and Operational Combined Uniform Single (FOCUS) Report and includes a balance sheet, equity conciliation, income statement, and net capital calculation.

As part of the audit compliance procedures, these FOCUS reports are reviewed in accordance with the required standards.


Can I Hire a New Auditor? 

If you are not satisfied with your current auditing team, you have until December 15, 2021, to change broker dealer auditors.


Need a PCAOB Certified Auditor? We Can Help 

Broker dealers operate in a highly regulated industry. Assurance Dimensions is one of a select few PCAOB-registered audit firms in the specialized broker-dealer market.  Contact us today to request an audit quote and get help with your broker dealer audits