Preparing for your annual broker-dealer audit should be a proactive agenda throughout your company’s fiscal year. Early preparation allows your business to stay compliant with the numerous rules and regulations. Failure to implement preemptive measures may result in an interruption of your business.
Tips to Help Prepare for Your Annual Broker Dealer Audit
Working with a highly trained dedicated accounting team is crucial. An accountant will be able to help you plan, prepare and resolve any auditing issues.
- Continuous communication with the auditors will help you and the auditors plan for an efficient and effective audit. Communicate any changes to systems and/or operations. These may include a business combination, new revenue streams, new agreements, or other items that may create more audit work or require complex accounting.
- Discuss with your auditor the timing of interim and year-end procedures.
- Discuss accounting standard changes ahead of time to ensure proper implementation.
- Prepare Your Team
Review your current accounting policies and procedures. Make sure these enable your company to have good financial reporting and be in compliance with SEC Rules and Regulations.
- Documentation: Gather and prepare all needed materials for your annual broker deal audit ahead of time. Use previous requests lists provided by the auditors or ask that they update a list in advance. When the time comes, your company wants to show professionalism and prepared documentation to support the financial statements under audit.
- Company Logs: Be prepared to provide copies of any correspondence requested by your external auditors. If you receive any type of correspondence with FINRA, you need to keep a log. Record dates, time, and the FINRA representative’s name. Also make your auditor aware of any major business changes in advance, so they can request new information. These may include a business combination, new revenue streams, new agreements, or other items that may create more audit work or require complex accounting.
- Monitor and Review: In order to ensure your current system is providing an optimal outcome, monitor and review your internal accounting process throughout the year. If your team fails to provide the necessary documentation or review information, you will need to change internal accounting procedures.
- Know the Rules for Independent Auditing Services
A separate firm must perform your company’s annual broker-dealer audit. A company may not use the same accounting firm that it consults on bookkeeping, other management functions, or financial statement preparation. Review the rules, laws, and guidelines for turning your audit over to another firm. The point of an independent audit is to have an independent opinion on the Company’s financials.
- Stay Compliant
Understanding the complexities of the rules and regulations of the securities industry is a priority. Without the proper knowledge of broker-dealer regulations and requirements, your company may fail to stay compliant. Addressing significant changes in the broker dealer industry with a knowledgeable accounting firm will aid in keeping your company running in a smooth manner.
- Work Together
Working together is one of the best ways to ensure your company is ready for an annual broker-dealer audit. Knowledgeable employees who know the value of the annual audit will carefully follow the rules and regulations to ensure your company stays compliant at all times.
Preparing for an annual broker-dealer audit may seem intimidating. Having a plan prior to audit will help your company reduce chances of issues and SEC violations. An accounting firm will be able to direct your company’s accounting team or bookkeeper on the required documentation for the audit, allowing you time to prepare and organize.
Our broker dealer audit services include giving our clients guidance. If you have any questions about our broker dealer services, one of our CPAs would be happy to speak with you at (925) 933-2626 or, email us at email@example.com.