Tuesday, November 24, 2009

BD Audited Financial Statements

Broker dealers have had a longstanding requirement to submit annual audited financial statements to FINRA, the Financial Industry Regulatory Agency, and the SEC, Securities and Exchange Commission.

Beginning with the year ended December 31, 2008 these audited financial statements must be conducted by a CPA that has been registered with the PCAOB, Public Company Accounting Oversight Board.

The process that a CPA must undergo to be registered is not always simple. The CPA's internal process of quality control is put to scrutiny even in the registration process. The CPA must explain their means of assuring the following:

  • Independence Integrity and Objectivity
  • Engagement Performance
  • Personnel Management
  • Acceptance and Continuance of Client Engagements
  • Monitoring

There are in the range of 3,000 CPA's and CPA Firms that are registered with the PCAOB. This is a small fraction of all CPA's and CPA Firms worldwide.

In theory the audit's conducted should not have changed from prior years and as such the annual fee should be comparable. Many broker dealers have found the fees they are being quoted are not similar to the prior years.

That any firms or CPA's fees are higher when they are subject to more scrutiny and regulation should make sense. Yet some small broker dealers feel to be victims of excessive regulation in a year that they have been affected as much as the rest of us have been by the depressed economy.

As much as possible I have made myself available via email and phone to see if I can perform a Broker Dealer audited financial statement for a reasonable fee. Please understand though that an engagement to conduct an audited financial statement is extensive and requires careful planning and takes time. There is never a fee to discuss the options of preparing the audited financial statements for a client and I welcome the opportunity to talk to you.

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