Washington, D.C. (May 12, 2014) – The Center for Audit Quality (CAQ) and the American Institute of CPAs (AICPA) have issued a member alert outlining regulatory changes that are applicable to audits and attestation engagements of brokers and dealers and futures commission merchants, including those entities that are dually-registered.
The alert is intended to highlight for audit firms certain auditing considerations in response to regulatory changes set forth by the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), as well as related guidance and standards issued by the Public Company Accounting Oversight Board (PCAOB).
The alert addresses: SEC Amendments to Rule 17a-5 and PCAOB Attestation Standards No. 1 and No. 2; PCAOB Auditing Standard No. 17; CFTC Customer Protection Rules for Futures Commission Merchants; and CFTC-Registered Introducing Brokers. The alert also highlights related resources and programs including: the PCAOB’s Inspection Program and Forums on Auditing Smaller Broker-Dealers; AICPA’s Peer Review Program; and the AICPA’s Stockbrokerage and Investment Banking Expert Panel, which addresses regulatory matters from the broker and dealer industry perspective.
“Several significant regulatory changes will soon go into effect that are critical to the auditor, and this document is an example of the profession looking forward in preparing for such changes,” said CAQ Executive Director Cindy Fornelli.
AICPA President and CEO Barry C. Melancon, CPA, CGMA, said, “The AICPA is committed to activities that enhance audit quality and has been a leader assisting practitioners in achieving that goal. This member alert, part of a profession-wide effort to identify ways to boost investor confidence in the integrity of audited financial statements, will help auditors of brokers and dealers and futures commission merchants navigate recent regulatory changes.”
The new amendments represent significant areas of change as they relate to the annual reporting requirements of broker-dealers and futures commission merchants. The CAQ and AICPA encourage audit firms to discuss the potential ramifications of these amendments with their broker and dealer and futures commission merchant clients as soon as practical, and assess the changes that are applicable based on the operations of the entity being audited and the regulatory agencies with which the entity is registered.
The new rules addressed in the alert are generally effective for audits and attestation engagements of broker-dealers and futures commission merchants with fiscal years ending on or after June 1, 2014. Other changes in the rules have effective dates prior or subsequent to June 1, 2014; however this alert is intended to address the major changes effective on June 1, 2014.