Expert Panel - Stockbrokerage and Investment Banking

About the Expert Panel

The Stockbrokerage and Investment Banking Expert Panel serves the needs of AICPA members on financial and business reporting and audit and attest matters. The expert panel protects the public interest by bringing together knowledgeable parties in the stockbrokerage and investment banking industry to deliberate and come to agreement on key stockbrokerage and investment banking issues.

Industry News and Resources

Expert Panel Projects

• The following table compiled by the AICPA Stockbrokerage and Investment Banking Expert Panel summarizes relevant SEC financial responsibility rules requirements and offers examples of related compliance risk considerations.
• Q&A Section 6980 Brokers and Dealers
• A summary of audit, attestation and independence standards applicable to AICPA members performing audit and attestation engagements for certain SEC and/or CFTC-registered entities. [updated June 2022]
• During the March 2022 EP meeting, the Expert Panel members discussed certain considerations related to fractional share transactions with customers. Click here for March 2022 EP meeting highlights.
• During January 2021 EP meeting, the EP members discussed recently compiled draft considerations when SEC-registered broker-dealers develop an accounting policy footnote related to FASB ASC Topic 326 (CECL) and the impact of FASB ASU 2019-12, Simplifying the Accounting for Income Taxes, on broker-dealer net capital. Click here for January 2021 EP meeting highlights. (NEW, updated February 4, 2021)
• Illustrative examples of compliance report and (NEW, updated January 2021) exemption report required by the SEC Rule 17a-5.
• The AICPA Stockbrokerage and Investment Banking Expert Panel recommends the following relevant COVID-19-related resources for industry preparers and their auditors.
• The Expert Panel is monitoring activities related to digital currencies. Click here for a non-inclusive list of recent relevant public statements and publications from interested parties. 
• SEC-registered broker-dealers are required under SEC Rule 17a-5(c)(2) to annually file with the SEC, among other things, a financial report containing financial statements and supporting schedules along with an auditor's report on the financial statements and supporting schedules. This illustrative auditor's report has been prepared by the AICPA Stockbrockerage and Investment Banking Expert Panel to assist practitioners in their audits of SEC-registered broker-dealers. 
• The AICPA recommends that firms performing SIPC AUP engagements follow both the PCAOB and AICPA standards until such time as the PCAOB clarifies its authority under the Sarbanes Oxley Act, as amended. The AICPA Stockbrokerage and Investment Banking Expert Panel worked with SIPC staff to revise illustrative SIPC AUP reports to reflect dual standards reporting. For most current SIPC AUP illustrative reports, click here.
• The AICPA Stockbrokerage and Investment Banking Expert Panel created an illustrative Report of Independent Accountant on Internal Control Pursuant to Commodity Futures Trading Commission Regulation 1.16 for CFTC-registered introducing brokers.

Securities and Exchange Commission

• Conditional 30-day audit extension for certain small SEC-registered broker-dealers has been approved February 12, 2021
• Electronic Filing of Broker-Dealer Annual Reports
• The SEC Office of Compliance Inspections and Examinations’ 2020 examination priorities for investment advisers and investment companies, broker-dealers, transfer agents, clearing agencies, private fund advisers, national securities exchanges, and municipal advisors.
• The staff of the SEC Division of Trading and Markets has issued staff guidance (in the form of FAQs). To read FAQs, issued in April 2014, about the amendments to Rule 17a-5 and Form Custody, click here. For FAQs, issued in March 2014, concerning certain broker-dealer financial responsibility rules, click here. Other FAQs published by the staff of the SEC Division of Trading and Markets are available here.
• In July 2013, the SEC issued two final rules that affect broker-dealers registered with the SEC and their auditors. One rule adopts amendments that would increase protections for investors whose cash and securities are held by broker-dealers registered with the SEC. These amendments to SEC Rule 17a-5 require, in part, that the audits of broker-dealers' financial statements and supplemental information, as well as the auditor's examination of the compliance report or the auditor's review of the examination report, be conducted in accordance with PCAOB standards for fiscal years ending on or after June 1, 2014.

Public Company Accounting Oversight Board

• Slides from 2019 PCAOB forum on auditing smaller broker-dealers.
• August 2020 – PCAOB issued its Annual Report on the Interim Inspection Program Related to Audits of Brokers and Dealers. Under the interim inspection program adopted in 2011, the PCAOB inspects audit engagements of all types of SEC-registered broker-dealers.
• Staff Guidance on Implementing Changes to Auditor's Report and related webinars.
• Relevant information from recent PCAOB webinars that may be of interest to broker-dealers and their auditors are available:
      January 2017 - Auditing Information Produced by Service Organizations
      January 2016 - PCAOB inspections of small firm broker-dealer auditors
      December 2016 - Auditing Information Produced by Service Organizations
      January 2015 - PCAOB Standards for small firm auditors of broker-dealers
• July 2016 - PCAOB issued a Staff Inspection Brief which contains information about 2016 Inspections of Auditors of Brokers and Dealers.
• January 2015 - PCAOB Reports Deficiencies in Broker-Dealer Audits under PCAOB Standards.
• June 2014 -  PCAOB released staff guidance for auditors of SEC-registered brokers and dealers.
• In October 2013, the PCAOB adopted two attestation standards pertaining to audits of brokers and dealers and an auditing standard, which is applicable when auditors are engaged to perform audit procedures and report on supplemental information that broker-dealers and others file with the SEC. These standards are effective for fiscal years ending on or after June 1, 2014.

U.S. Commodity Futures Trading Commission

• In November 2013, the CFTC approved a final rule on enhancing customer protections, which, in part, will require audits of futures commission merchants (FCMs) to be performed in accordance with PCAOB standards by a PCAOB-registered firm that “must have undergone a PCAOB inspection”.

Securities Investor Protection Corporation

• March 2016 - SEC approved SIPC Rule 600, Rules Relating to Supplemental Report of SIPC Membership. These rules now prescribe the form and content of the SIPC supplemental report and require that a registered broker-dealer must file a report with SIPC, and no longer with the SEC. The SIPC maintains Member FAQs where member firms and their auditors can find information regarding SIPC forms, membership, and how and where to file reports. For more information, click here.

Expert Panel Recommended Guidance

• CAQ Broker-Dealer resource page
  
• AICPA Brokers and Dealers in Securities Revenue Recognition Task Force
  

Publications and CPE

• AICPA Accounting Guide Brokers and Dealers in Securities
• AICPA Audit Risk Alert General Accounting and Auditing Developments
• Conferences