SEC Evaluating Scaled Approach for Broker-Dealer Reporting and Audit Requirements

SEC Evaluating Scaled Approach for Broker-Dealer Reporting and Audit Requirements

Posted on

By Christopher L. Wallace, CPA, Business Assurance & Advisory Services Partner | Financial Services Industry Team

New SEC Proposal Supports Business Friendly Approach to Regulation for Broker-Dealers

In my previous article, Senators Introduce the Small Business Audit Correction Act, I wrote about a bill introduced in the Senate on October 30, 2019, that would exempt smaller brokers from certain audit and reporting requirements that are better suited for larger entities. More recently, the U.S. Securities and Exchange Commission (SEC) announced that it plans to issue a proposal by September 2020 that would scale back the annual reporting and audit requirements for some classes of broker-dealers. Seemingly announcing that it has no intention of waiting for Congress to act, SEC chairman, Jay Clayton, has stated that he believes a “one size fits all” regulatory regime is “unduly burdensome for smaller firms”. This mentality is in line with the business friendly approach to regulation under the Trump Administration.

The SEC oversees the Public Company Accounting Oversight Board, (PCAOB), which continues to work on a plan to set up a permanent inspection program for audits of broker-dealers (the “temporary inspection process” has been in place for over five years).  In a September 2019 speech, SEC Chief Accountant, Sagar Teotia, said he believes that requirements should be “commensurate with the risks that regulation seeks to lessen”. In other words, the SEC believes the PCAOB should consider size and complexity of audits of regulated businesses and that the same answer may not apply to every broker-dealer audit.

Hopefully this common sense alternative gains some traction and eases the financial accounting and reporting burden on smaller non-carrying broker-dealers.


Our Financial Services Industry team will keep you updated on any changes regarding this proposal and other regulatory changes that may impact your Financial Services business.

Additional Financial Services Industry Resources


About the Author

Chris serves as the leader of the Firm’s Financial Services Industry Team, and in that role oversees services to the Firm’s broker dealer, hedge fund, private equity fund, real estate fund, and other financial service clients. Chris has over 20 years of experience in public accounting providing audit and consulting services to clients in various industries. He is also the Practice Leader of the Business Assurance and Advisory Services Group.

More Insights from Christopher L. Wallace, CPA


The information contained within this article is provided for informational purposes only and is current as of the date published. Online readers are advised not to act upon this information without seeking the service of a professional accountant, as this article is not a substitute for obtaining accounting, tax, or financial advice from a professional accountant.

Contact

How Can We Help You and Your Business?

Innsbrook Corporate Center
4401 Dominion Boulevard
Glen Allen, Virginia 23060

804.747.0000 or 804.273.6200

Directions