Webinar Slides: New Reporting Requirements for Broker-Dealers


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Original air date:
May 13, 2014
Archived recording at http://www.mhmcpa.com

Significant changes are about to take effect for broker-dealers and auditors alike. New rules have been adopted by the Securities and Exchange Commission (SEC) and the responsibility for oversight of auditors of broker-dealers has been delegated to the Public Company Accounting Oversight Board (PCAOB). As a result, broker-dealers will be required to file new schedules with the SEC and auditors will begin performing such audits in accordance with the standard of the PCAOB. Learn how you can prepare for these requirements during this free webinar from CBIZ and Mayer Hoffman McCann.

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Webinar Slides: New Reporting Requirements for Broker-Dealers

  1. 1. CBIZ & MHM Executive Education Series™ Broker-Dealer Update Mike Loritz, Malcolm McDermid May 13, 2014
  2. 2. 2#CBIZMHMwebinar#CBIZMHMwebinar  To view this webinar in full screen mode, click on view options in the upper right hand corner.  Click the Support tab for technical assistance.  If you have a question during the presentation, please use the Q&A feature at the bottom of your screen. Before We Get Started…
  3. 3. 3#CBIZMHMwebinar#CBIZMHMwebinar  This webinar is eligible for CPE credit. To receive credit, you will need to answer periodic participation markers throughout the webinar.  External participants will receive their CPE certificate via email immediately following the webinar. CPE Credit
  4. 4. 4#CBIZMHMwebinar#CBIZMHMwebinar The information in this Executive Education Series course is a brief summary and may not include all the details relevant to your situation. Please contact your service provider to further discuss the impact on your business. Disclaimer
  5. 5. 5#CBIZMHMwebinar Today’s Presenters Malcolm McDermid, CPA Shareholder, MHM 612.376.1230 | mmcdermid@cbiz.com Located in MHM’s Minneapolis, MN office, Malcolm has 30 plus years of experience in financial reporting for both public and private companies. In addition to his other audit and tax responsibilities, Malcolm manages the technical audit practice in the Minneapolis office. Areas of client industry specialization include wholesale and distribution, financial services, software and manufacturing. Mike Loritz, CPA Shareholder, MHM 913.234.1226 | mloritz@cbiz.com Mike has 18 years of experience in public accounting with diversified financial companies and other service based companies, including banking, broker/dealer, investment companies, and other diversified companies ranging from audits of public entities in the Fortune 100 to small private entities. He is a member of MHM's Professional Standards Group, providing accounting knowledge leadership in the areas of derivative financial instruments, investment securities, share-based compensation, fair value, revenue recognition and others.
  6. 6. 6#CBIZMHMwebinar#CBIZMHMwebinar Learning Center  Changes to SEC Rules/Regulations  Financial Responsibility Rule Changes  Reporting, Audit & Notification Requirements  SEC Q&A’s  Independent Public Accountant’s Responsibility  Attestation Standards  Audit Standard No. 17  Interim Inspection Findings  PCAOB Conforming Rule Changes Today’s Agenda
  8. 8. 8#CBIZMHMwebinar#CBIZMHMwebinar Changes to Financial Responsibility Rules (June 30, 2013)  Changes to Rule 15c3-1 (Net Capital)  Changes to Rule 15c3-3 (Customer Protection Rule)  Changes to the Recordkeeping and Notice Requirements (Rule 17a-3 & 4)  Over $20 million in net capital or $1 million in credit adjustments - Requirement to document procedures for managing risk & liquidity :  “the credit, market, and liquidity risk management controls established and maintained by the broker-dealer to assist it in analyzing and managing the risks associated with its business activities.” Regulatory Activities – Summary
  9. 9. 9#CBIZMHMwebinar#CBIZMHMwebinar Enhance the ability of the SEC to oversee broker-dealer custody practices and, among other things, to:  Increase the focus of broker-dealers that maintain custody of customer funds and securities (“carrying broker-dealers”) and their independent public accountants on compliance, and internal control over compliance, with certain financial and custodial requirements;  Strengthen and clarify broker-dealer audit and reporting requirements in order to facilitate consistent compliance with these requirements;  Facilitate the ability of the PCAOB to implement the explicit oversight authority over broker-dealer audits provided to the PCAOB by the Dodd- Frank Act;  Ensure that SIPC receives the necessary information to assess whether the liquidation fund it maintains is appropriately sized to the risks of a large broker-dealer failure;  Enable Commission and DEA examiners to conduct risk-based examinations of carrying and clearing broker-dealers by assisting the examiners in selecting areas of focus for their examinations; and  Provide the Commission and the DEAs with a comprehensive overview of a broker-dealer’s custody practices Regulatory Activities – Why?
  10. 10. 10#CBIZMHMwebinar#CBIZMHMwebinar Requirement to deduct certain liabilities or expenses assumed by third parties In calculating net capital, deduct from net worth  “… any liability or expense relating to the business of the broker or dealer for which a third party has assumed the responsibility, unless the broker or dealer can demonstrate that the third party has adequate resources independent of the broker or dealer to pay the liability or expense.” (emphasis added)  SEC Rule 15c3-1(c)(2)(i)(F)  Rule change effective October 21, 2013 Changes to Rule 15c3-1
  11. 11. 11#CBIZMHMwebinar#CBIZMHMwebinar In calculating net capital, deduct from net worth capital contributions w/ intent to withdraw:  SEC Rule 15c3-1(c)(2)(i)(G)  “… any contribution of capital to the broker or dealer: (1) Under an agreement that provides the investor with the option to withdraw the capital; or (2) That is intended to be withdrawn within a period of one year of contribution. Any withdrawal of capital made within one year of its contribution is deemed to have been intended to be withdrawn within a period of one year, unless the withdrawal has been approved in writing by the Examining Authority for the broker or dealer.” Rule change effective October 21, 2013 Changes to Rule 15c3-1
  12. 12. 12#CBIZMHMwebinar#CBIZMHMwebinar Previous Rule 15c3-1(e) (3)(i): LIMITATION ON WITHDRAWAL OF EQUITY CAPITAL  Temporary Restrictions on Withdrawal of Net Capital  The Commission may by order restrict, for a period up to twenty business days, any withdrawal by the broker or dealer of equity capital or unsecured loan or advance to a stockholder, partner, sole proprietor, employee or affiliate if such withdrawal, advance or loan:  When aggregated with all other withdrawals, advances or loans on a net basis during a 30 calendar day period exceeds 30 percent of the broker or dealer's excess net capital; and  The Commission, based on the facts and information available, concludes that the withdrawal, advance or loan may be detrimental to the financial integrity of the broker or dealer, or may unduly jeopardize the broker or dealer's ability to repay its customer claims or other liabilities which may cause a significant impact on the markets or expose the customers or creditors of the broker or dealer to loss without taking into account the application of the Securities Investor Protection Act. Changes to Rule 15c3-1
  13. 13. 13#CBIZMHMwebinar#CBIZMHMwebinar Capital Withdrawals Rule 15c3-1(e)(3)(i) – “The Commission may by order restrict, for a period up to twenty business days, any withdrawal by the broker or dealer of equity capital or unsecured loan or advance to a stockholder, partner, sole proprietor, member, employee or affiliate under such terms and conditions as the Commission deems necessary or appropriate in the public interest or consistent with the protection of investors.”  Any amount of a withdrawal could be restricted, presumably excess net capital would be difficult to determine  Applies to withdrawal, advances and loans  Rule change effective October 21, 2013 Changes to Rule 15c3-1
  14. 14. 14#CBIZMHMwebinar#CBIZMHMwebinar Solvency Requirements A broker-dealer must be solvent. Considered insolvent if:  Placed in a voluntary or involuntary bankruptcy or similar proceeding;  Has a trustee, receiver, or similar official appointed;  Makes a general assignment for the benefit of its creditors;  Makes an admission of insolvency; or  Is not able to make computations necessary to establish compliance with the net capital rule. If insolvent, must cease conducting business Notice sent to SEC, DEA, CFTC Rule change effective October 21, 2013 Changes to Rule 15c3-1
  15. 15. 15#CBIZMHMwebinar#CBIZMHMwebinar Potential Obligations when Guarantees Exist – Capital Contributions from Parent, Using Borrowed Funds  Interpretation to SEA Rule 15c3-1(c)(2)/08  The parent of a broker-dealer may borrow funds and infuse those funds as additional paid-in capital into the firm without adverse net capital consequences provided the broker-dealer:  Is not, in any way, a party to the lending arrangement:  Has no assets, directly or indirectly, pledged to secure the loan; and  Is not subject to any recourse of any kind to the lender for collection of the loan against the parent. (emphasis added) Rule 15c3-1: Other Matters
  16. 16. 16#CBIZMHMwebinar#CBIZMHMwebinar  Source of Capital Contributions  Acceptable contributions for regulatory purposes may be made by existing owners or parties which receive newly issued ownership interests in exchange for their contributions.  Capital contributions from any other party will be considered a “loan” and excluded from regulatory capital.  Basis for the Limitation on Contributors  Ownership and capital structures are deliberately designed.  Capital contributions should be made in a manner consistent with the capitalization structure of the firm.  By-passing ownership structure creates potential risk to the broker/dealer.  Contributions from non-owners could be claimed in a lawsuit.  Potential claims due to the insolvency of the contributing party Rule 15c3-1: Other Matters
  17. 17. 17#CBIZMHMwebinar#CBIZMHMwebinar Proprietary Accounts  Aligns the definition of customer with SIPC to include introducing B/Ds  Carrying Broker/Dealer  Require a separate reserve computation for proprietary accounts of other broker dealers  In addition to the customer reserve computation previously required  Establish and fund a separate reserve bank account for the benefit of PAB account holders  Obtain and maintain physical possession or control of non- margin securities carried for PAB accounts Changes to Rule 15c3-3
  18. 18. 18#CBIZMHMwebinar#CBIZMHMwebinar Proprietary Accounts Customer and PAB reserve accounts may not be held at  A bank affiliated with the broker-dealer holding the PAB account;  A bank, to the extent that the amount of cash deposited in the reserve account exceeds 15% of the bank’s equity capital (based on the bank’s most recently filed Call Report or Thrift Financial Report). May use account for its own purposes provided the PAB holder consents Changes to Rule 15c3-3
  19. 19. 19#CBIZMHMwebinar#CBIZMHMwebinar Form Custody  Require a broker-dealer to file a new quarterly report (called Form Custody) within 17 business days of period end  Contains information about whether and how the BD maintains custody of its customers’ securities and cash.  The reports will establish a custody profile for the broker-dealer that examiners can use as a starting point to focus their custody examinations.  Designed to elicit information concerning whether a broker- dealer maintained custody of customer and non-customer assets, and, if so, how such assets were maintained. Filed by all brokers and dealers without exception Reporting Requirements
  20. 20. 20#CBIZMHMwebinar#CBIZMHMwebinar Form Custody Nine Items: 1. Accounts Introduced on a Fully Disclosed Basis 2. Accounts Introduced on an Omnibus Basis 3. Carrying Broker-Dealers 4. Carrying for Other Broker-Dealers 5. Trade Confirmations 6. Account Statements 7. Electronic Access to Account Information 8. Broker-Dealers Registered as Investment Advisers 9. Broker-Dealers Affiliated with Investment Advisers Reporting Requirements
  21. 21. 21#CBIZMHMwebinar#CBIZMHMwebinar New Reporting Requirements  A broker-dealer that has custody of the customers’ assets must file a “compliance report” with the SEC.  The broker-dealer also must engage a PCAOB-registered independent public accountant to prepare a report based on an examination of certain statements in the broker-dealer’s compliance report.  A broker-dealer that does not have custody of its customers’ assets must file an “exemption report” with the Commission citing its exemption from requirements applicable to carrying broker-dealers.  The broker-dealer also must engage a PCAOB-registered independent public accountant to prepare a report based on a review of certain statements in the broker-dealer’s exemption report. Reporting Requirements
  22. 22. 22#CBIZMHMwebinar#CBIZMHMwebinar New Reporting Requirements  A broker-dealer that is a member of SIPC also must file its annual reports with SIPC.  Allows SIPC to better monitor industry trends and enhance its knowledge of particular firms.  The examination or review of the new reports as well as the audit of the financial statements must be conducted in accordance with PCAOB Audit & Attestation standards. Reporting Requirements
  23. 23. 23#CBIZMHMwebinar#CBIZMHMwebinar New Reporting Requirements – Workpaper Access  Requires broker-dealers with custody (and/or clearing) to agree to allow the SEC or DEA to review the work papers of the independent public accountant if requested in writing for purposes of an examination of the broker-dealer.  They must allow the accountant to discuss their findings with the examiners. Reporting Requirements
  24. 24. 24#CBIZMHMwebinar#CBIZMHMwebinar Compliance Report The compliance report will be filed by a broker-dealer that maintains custody of customer funds or securities and includes management assertions that address:  Whether it was in compliance in all material respects with the specified rules related to net capital requirements and other items  Whether the information used to assert compliance was derived from the books and records of the company  Whether internal control over compliance was effective during the most recent fiscal year such that there were no instances of material weaknesses Reporting Requirements
  25. 25. 25#CBIZMHMwebinar#CBIZMHMwebinar  The Compliance Report includes five specific statements 1. The broker-dealer has established and maintained Internal Control Over Compliance 2. Internal Control Over Compliance was effective as of and during the fiscal year 3. Internal Control Over Compliance was effective as of the end of the fiscal year 4. Broker-dealer was in compliance with Rule 15c3-1 (the Net Capital Rule) and Rule 15c3-3(e) (the Customer Reserve Requirement of the Customer Protection Rule) as of the end of the fiscal year 5. The information was derived from the books and records of the broker-dealer Reporting Requirements 25
  26. 26. 26#CBIZMHMwebinar#CBIZMHMwebinar Compliance Report  The Compliance Report must also include the following, if applicable  Each identified material weakness in the Internal Control Over Compliance during and as of the end of the fiscal year  Any instances of non-compliance with the Net Capital and the Customer Reserve Requirement of the Customer Protection Rules as of the end of the fiscal year Reporting Requirements 26
  27. 27. 27#CBIZMHMwebinar#CBIZMHMwebinar Compliance Report Carrying broker-dealer could not assert compliance with the Financial Responsibility Rules if it identifies one or more instances of material non-compliance  Material non-compliance: A failure by the broker-dealer to comply with any of the requirements of the Financial Responsibility Rules in all material respects  Material weakness: A deficiency, or a combination of deficiencies, in internal control over compliance with the Financial Responsibility Rules, such that there is a reasonable possibility that material noncompliance with those provisions will not be prevented or detected on a timely basis Regulatory Activities – Summary
  28. 28. 28#CBIZMHMwebinar#CBIZMHMwebinar Exemption Report  The exemption report will be filed by a broker-dealer that claims exemption from the requirements of the SEC rule related to the safeguarding of customer assets  Will also identify the specific conditions that form the basis for the exemption  Includes the following statements:  Identified the exemption claimed under Rule 15c3-3(k)  Met the identified exemption provision of Rule 15c3-3(k) during the fiscal year without exception or exceptions are described in the Exemption Report  If applicable, identification of exception during the fiscal year (include nature and approximate date) Reporting Requirements
  29. 29. 29#CBIZMHMwebinar#CBIZMHMwebinar The SEC released a Frequently Asked Q&A document on March 6, 2014 related to the changes to the Financial Responsibility Rules:  Clarify expense sharing arrangements are included in the 15c3-1 changes  Clarify definition of affiliate (bank)  May borrow securities for compliance with 15c3-3  Notice and other clarifications (PAB accounts)  Free credit balance transactions SEC Q&A – March 6, 2014
  30. 30. 30#CBIZMHMwebinar#CBIZMHMwebinar The SEC release a Frequently Asked Q&A document on April 4, 2014 related to the changes to the Reporting, Audit and Notification Requirements:  Clarify reporting period for the compliance report (June 1, 2014)  Accountant’s report must cover internal controls since the date of the last examination  Accountant’s report does not satisfy the Custody Rule requirements  Reporting dates regarding accountant (10th day of the month of the fiscal year end – i.e. Dec 10 for December 31)  PAB reserve requirements calculation included in the supporting schedules  Clarifies instances in which an exemption report may be filed  Various clarifications regarding Form Custody SEC Q&A – April 4, 2014
  32. 32. 32#CBIZMHMwebinar#CBIZMHMwebinar  Amended Rule 17a-5(d)(5) to replace the term “annual audit report” with “annual reports”  Annual reports include  Financial report (Audited financial statements and supplemental schedules)  Compliance or Exemption report issued by management  Reports prepared by an independent public accountant covering either the compliance or exemption report  Due date: 60 calendar days after the fiscal year end Filing Annual Reports 32
  33. 33. 33#CBIZMHMwebinar#CBIZMHMwebinar New rules, applicable to audits for year-ends on and after June 1, 2014:  Audits of financial reports will be prepared in accordance with the PCAOB Standards  SEC amended Rule 17a-5 to state that examination of Compliance Reports and review of Exemption Reports will be in accordance with PCAOB Standards  Auditor’s Report on Internal Control previously required by SEC Rule 17a-5(g)(1) is replaced by the auditor’s Examination Report or Review Report, as appropriate Engagement of the Accountant 30
  34. 34. 34#CBIZMHMwebinar#CBIZMHMwebinar PCAOB issued new standards to align attestation standards more closely with the auditor’s responsibility under the amendments to Rule 17a-5:  The PCAOB issued a new auditing standard on supplemental information accompanying audited financial statements that broker-dealers and issuers file with the SEC, such as supporting schedules.  Two attestation standards related to the auditor's examination of compliance reports and review of exemption reports of broker-dealers. Auditor’s Responsibility
  35. 35. 35#CBIZMHMwebinar#CBIZMHMwebinar Requires the auditor to obtain moderate assurance about the following statements in the exemption report:  A statement that identifies the exemptive provisions claimed by the broker-dealer  A statement that the broker-dealer  Met the identified exemption provisions throughout the fiscal year without exception OR  Met the identified exemption provisions throughout the fiscal year, except as described in exemption report  If applicable, identification of each exception with descriptions (nature and approximate date(s)) Auditor’s Responsibility - Exemption 35
  36. 36. 36#CBIZMHMwebinar#CBIZMHMwebinar We have reviewed management's assertion, included in the accompanying [title of the exemption report], that ABC Broker is exempt from the provisions of Rule15c3-3 under the Securities Exchange Act of 1934 because it meets conditions set forth in paragraph (k) ([fill in which exemption provision – (1), (2)(i), (2)(ii), or(3)]) of that rule (the "exemption conditions"). ABC Broker's management is responsible for compliance with the exemption conditions and its assertion. Our review was conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States) and, accordingly, included inquiries and certain other procedures to obtain evidence about ABC Broker's compliance with the exemption conditions. A review is substantially less in scope than an examination, the objective of which is the expression of an opinion on management's assertion. Accordingly, we do not express such an opinion. Based on our review, nothing came to our attention that caused us to believe that management's assertion referred to above is not fairly stated, in all material respects, based on the conditions set forth in paragraph (k)([fill-in which exemption provision – (1), (2)(i), (2)(ii), or (3)]) of Rule 15c3-3 under the Securities Exchange Act of 1934. Sample Review Report
  37. 37. 37#CBIZMHMwebinar#CBIZMHMwebinar Auditing Standard No. 17, Auditing Supplemental Information Accompanying Auditing Financial Statements  Establishes the auditor's responsibilities when performing audit procedures and reporting on supplemental information that accompanies the audited financial statements of broker-dealers and others (may include employee benefit plans)  Intended to give the SEC and other users greater confidence in the quality and consistency of supplemental information accompanying financial statements Auditor’s Responsibility - SI 37
  38. 38. 38#CBIZMHMwebinar#CBIZMHMwebinar Auditor performance requirements included in AS 17 include the following:  Determine that the supplemental information reconciles to the underlying accounting and other records or to the financial statements, as applicable  To test the completeness and accuracy of the supplemental information (to the extent it was not tested as part of the annual audit of the financial statements)  To evaluate whether or not the supplemental information, including form and content, complies with the relevant regulatory requirements or other applicable criteria Auditor’s Responsibility - SI 38
  39. 39. 39#CBIZMHMwebinar#CBIZMHMwebinar  Supplemental Information refers to the following items:  Supporting schedules required to be filed pursuant to Rule 17a-5  Supplemental information (1) Required to be presented pursuant to the rules and regulations of a regulatory authority (2) Covered by an auditor’s report on that information related to financial statements that are audited in accordance with PCAOB standards  Although not required, information that is  Ancillary to the audited financial statements;  Derived from the company’s accounting books and records; and  Covered by an auditor’s report on that information related to financial statements that are audited in accordance with PCAOB standards Auditor’s Responsibility - SI 39
  40. 40. 40#CBIZMHMwebinar#CBIZMHMwebinar  The notification provisions for broker-dealers (Rule 17a-11) have not changed.  Replaced “material inadequacies” with “material weakness”  Broker-dealer must provide a copy of the notification to the auditor within one business day.  If the auditor does not receive or agree with the statements in the notice, the accountant must provide a report to the SEC and DEA regarding the disagreement within one business day. Auditor’s Responsibility 22
  41. 41. 41#CBIZMHMwebinar#CBIZMHMwebinar Format of inspections:  Annual report on significant observations obtained during the inspections  These reports are not firm-specific.  Identify and address with the inspected firm any significant issues in its audit work  Where appropriate, information about potential violations by brokers or dealers would be referred to the SEC and other authorities  May lead to an investigation or disciplinary proceedings regarding the conduct of the firm PCAOB - Interim Inspection Details
  42. 42. 42#CBIZMHMwebinar#CBIZMHMwebinar Audit Deficiencies Number of Audits with Deficiencies Number of Applicable Audits Percentage of Audits with Deficiencies Risk of Material Misstatement Due to Fraud 37 60 62% Related Party Transactions 25 60 42% Revenue Recognition 42 60 70% Reliance on Records and Reports 30 60 50% Fair Value Measurements 5 19 26% Evaluation of Internal Control Deficiencies 6 60 10% Financial Statement Disclosures 29 60 48% Understanding the Entity 4 60 7% Auditor's Report 18 60 30% Inspections Observations – 2013
  43. 43. 43#CBIZMHMwebinar#CBIZMHMwebinar PCAOB Observation: Deficiencies noted related to:  Audit response to identified fraud risk  Presumption that revenue recognition is a fraud risk  Journal entry testing Consideration of Material Mis-statement Due to Fraud
  44. 44. 44#CBIZMHMwebinar#CBIZMHMwebinar PCAOB Observation  Deficiencies noted related to:  No procedures performed  Existence and identification of related parties and related party transactions  Examining identified related party transactions  Other Related Party Transactions
  45. 45. 45#CBIZMHMwebinar#CBIZMHMwebinar PCAOB Observation  There is insufficient testing of revenues  The testing of revenues must be on a disaggregated basis  Their expectation for detailed testing of revenue transaction is high – probably 65-70% or more  In order to reduce this level of detailed testing one needs to do tests of controls  Inappropriate use of substantive analyticals Revenue Recognition
  46. 46. 46#CBIZMHMwebinar#CBIZMHMwebinar PCAOB Observations  Auditing of the company’s net capital information  Minimum net capital requirements  Allowable assets  Haircuts  Operational charges  Internal control report  Have material inadequacies been disclosed  Compliance with exemption claimed under 15c3-3  Evaluation of reported net capital  Timely notification of material inadequacy to FINRA/SEC Auditing Supporting Schedules
  47. 47. 47#CBIZMHMwebinar#CBIZMHMwebinar PCAOB Observation Deficiencies noted related to:  Reasonable assurance to support whether material inadequacies were disclosed  Exemption claimed under Rule 15c3-3  Evaluation of reported net capital deficiencies as indicators of a material inadequacy  Timely notification of material inadequacy to SEC/FINRA Accountant’s Supplemental Report on Material Inadequacies
  48. 48. 48#CBIZMHMwebinar#CBIZMHMwebinar  Misuse of accounts  Inappropriate use of firm error accounts, or other accounts  For the benefit of the firm  For the benefit of a customer(s)  Failing to recognize charges to net worth  Unsecured debits  Open contractual commitment changes  Inappropriate role of affiliates  Activity may require the affiliate to register as a broker-dealer  Activity which if conducted would result in a higher net capital requirement  “Borrowing” capital  Existence of contingent guarantees Examination Findings
  50. 50. 50#CBIZMHMwebinar#CBIZMHMwebinar WHY?  The Rules include specific references to audits and auditors of brokers and dealers in the PCAOB’s rules  Ensure that the PCAOB can satisfy its explicit oversight authority granted under the Dodd-Frank Act with respect to audits and auditors of brokers and dealer that are registered with the SEC.  The Rules include  amendments that tailor certain of the Board’s rules to the audits of brokers and dealers,  call for relevant broker and dealer audit client information on the Board’s forms, and  amend a number of rules in light of the Board’s experience administering and enforcing these rules Key Amendments to Conform PCAOB Rules and Forms to the Dodd-Frank Act
  51. 51. 51#CBIZMHMwebinar#CBIZMHMwebinar Overall:  Added definition of audit committee (Rule 3501 & 3526)  Overall framework (Rules 3502 and 3520) Independence  Contingent fees (Rule 3521)  Tax transactions (Rule 3522)  Tax services for persons in a financial reporting oversight role (Rule 3523)  PCAOB independence rules applicable to auditors of issuers but not to auditors of brokers and dealers (Rules 3524 and 3525)  Communications with audit committees concerning independence (Rule 3526) No deferred compliance date for Rules 3521-3526 Key Amendments to Conform PCAOB Rules and Forms to the Dodd-Frank Act
  52. 52. 52#CBIZMHMwebinar#CBIZMHMwebinar Definition of Audit Committee:  The term "audit committee" means a committee (or equivalent body) established by and among the board of directors of an entity for the purpose of overseeing the accounting and financial reporting processes of the entity and audits of the financial statements of the entity; if no such committee exists with respect to the entity, the entire board of directors of the entity. For audits of non-issuers, if no such committee or board of directors (or equivalent body) exists with respect to the entity, "audit committee" means the person(s) who oversee(s) the accounting and financial reporting processes of the entity and audits of the financial statements of the entity. Key Amendments to Conform PCAOB Rules and Forms to the Dodd-Frank Act
  53. 53. 53#CBIZMHMwebinar#CBIZMHMwebinar Questions?
  54. 54. 54#CBIZMHMwebinar#CBIZMHMwebinar  Join us for these courses:  Implementation Issues of the New Private Company Accounting Alternatives, May 15  Is an ESOP Right for Your Company, May 20  Is Your Company Ready for the New Revenue Recognition Standards? May 27  Read these related publications:  MHM Messenger 14-11: Regulatory Considerations for Broker- Dealers If You Enjoyed This Webinar…
  55. 55. 55#CBIZMHMwebinar#CBIZMHMwebinar Connect with Us linkedin.com/company/ mayer-hoffman-mccann-p.c. @mhm_pc youtube.com/ mayerhoffmanmccann slideshare.net/mhmpc linkedin.com/company/ cbiz-mhm-llc @cbizmhm youtube.com/user/ BizTipsVideos slideshare.net/CBIZInc MHM CBIZ