A successful broker-dealer audit begins well before the auditors start fieldwork. Accurate books, reconciled accounts and organized regulatory support reduce delays and allow management to address questions before filing deadlines become urgent.
Close the books carefully
Bank, clearing, payroll and significant balance-sheet accounts should be reconciled and supported. Management should review unusual journal entries, aged receivables, related-party balances, legal expenses and transactions occurring near year end.
Reconcile regulatory reporting
The annual financial statements, trial balance and regulatory schedules should agree or have clearly documented reconciling items. Net capital, reserve, possession-or-control and exemption provisions should be supported according to the firm’s business and reporting status.
Prepare documentation early
Common requests include agreements, bank statements, clearing reports, invoices, confirmations, board or member approvals, regulatory correspondence and support for revenue recognition, leases, contingencies and related-party activity.
Coordinate responsibilities
Management, the FINOP, accounting personnel, compliance and outside auditors should understand who owns each request and when it is due. A centralized request list and periodic status meetings can prevent small open items from delaying the overall engagement.