The Broker Dealer Accounting Support Fee

Posted on 11.28.12

 As part of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd Frank Act”), the Public Company Accounting Oversight Board (“PCAOB”) has taken on additional responsibility of reviewing audits of brokers and dealers.  While audits of brokers and dealers are still performed under generally accepted auditing standards (as compared to auditing standards of the PCAOB), during 2012 the PCAOB began the task of selecting, reviewing, and commenting on the effectiveness of audits of registered brokers and dealers.  To fund the cost of the PCAOB’s initiative, the PCAOB will assess an accounting support fee among brokers and dealers which will be based on their relative net capital.  On October 19, 2012, the PCAOB issued a Frequently Asked Questions document to clarify the staff’s views on these fees.  Brokers and dealers whose average, quarterly tentative net capital is greater than $5 million during the prior calendar year and who are required to file audited financial statements with the SEC will be allocated a share of the broker-dealer accounting support fee.  An individual broker or dealer’s share of the accounting support fee is calculated as its average net capital during the preceding calendar year divided by the sum of the average net capital of all brokers and dealers with average net capital greater than $5 million during the preceding calendar year.  Brokers and Dealers with less than $5 million of average net capital are not subject to the fee.  For 2012, the PCAOB calculated the broker-dealer accounting support fee allocation as of August 31, 2012 and the invoice date of the fee is October 19, 2012, with payment due by November 18, 2012.  PCAOB Rule 7104(b)(1) provides that a registered public accounting firm generally may not issue an unqualified opinion without ascertaining that the broker or dealer has no outstanding past-due share of the accounting support fee or has a petition pursuant to PCAOB Rule 7103(c) pending.