FINRA Update

We have received many inquiries relating to a recent Financial Industry Regulatory Authority (FINRA) posting, as part of their weekly update relating to a firm’s designation of accountant, which reads:

“As a reminder, SEA Rule 171-5(f) (2) requires firms to file a statement with the SEC and its Designated Examining Authority that it has designated an independent public accountant responsible for performing the annual audit of the broker-dealer. In light of the recent rule changes to SEA Rule 17a-5, firms should continue to use the Designation of Accountant (link to the form) form through May 31, 2014. The form titled “Statement regarding the independent public accountant under Rule 17a-5(f)(2)” discussed in SEA Release No. 34-70073 will be required beginning June 1, 2014.”

Pertaining to the above statement, clients, like you, are asking, “Do we need to file another designation?” The answer is – it depends!  If you are sticking with your prior year auditors and when you first provided notice you selected the “on-going relationship” then no action is needed.  If you selected the “annual audit only” option, or are changing auditors, then yes, another designation notice is required.  In 2014 when the audits are conducted under PCAOB standards, WS+B will post about the essentials – “what you need to know!”

Note: For those with an inquisitive mind below is the full excerpt from the rule:

Designation of accountant

(i) Every broker or dealer which is required by paragraph (d) of this section to file an annual report of financial statements section shall file no later than December 10 of each year a statement with the Commission’s principal office in Washington, DC, the regional office of the Commission for the region in which its principal place of business is located, and the principal office of the designated examining authority for such broker or dealer. Such statement shall indicate the existence of an agreement dated no later than December first, with an independent public accountant covering a contractual commitment to conduct the broker’s or dealer’s annual audit during the following calendar year.

(ii) The agreement may be of a continuing nature, providing for successive yearly audits, in which case no further filing is required. If the agreement is for a single audit, or if the continuing agreement previously filed has been terminated or amended, a new statement must be filed by the required date.

(iii) The statement shall be headed “Notice pursuant to Rule 17a-5(f)(2)” and shall contain the following information:

  • (A) Name, address, telephone number and registration number of the     broker or dealer;
  • (B) Name, address and telephone number of the accounting firm; and
  • (C) The audit date of the broker or dealer for the year covered by the agreement.

(iv) Any broker or dealer which is exempted from the requirement to file an annual audited report of financial statements shall nevertheless file the notice specified herein indicating the date as of which the unaudited report will be prepared.

(v) Notwithstanding the date of filing specified in paragraph (f)(2)(i) of this section, every broker or dealer shall file the notice provided for in paragraph (f)(2) of this section within 30 days following the effective date of registration as a broker or dealer.

If you have any questions about designation of accountant or other accounting related matters please contact your regular WithumSmith+Brown Partner.


– Jessica Offer, CPA, Manager


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