Back in November 2013, we talked about the Designation of Accountant requirements. Well, effective June 1, 2014 there was an amendment to SEC Rule 17a-5(f)(2). As such, all Broker/Dealers must file a NEW Designation of Accountant form. FINRA has recently announced that there is a new electronic form, which will be available on the FINRA Gateway as of November 24, 2014. As in the past, this form is due by the 10th of the December (for fiscal year end December firms). All Broker/Dealers are required to file a new form, regardless of whether or not you have changed auditors, or if your audit engagement is continuous in nature. So, be sure to remind your FINOP to mark their calendars for the period 11/24 – 12/10, as they will have 16 days to file the new form. Again, a reminder that you should make sure your audit engagement letters have language in them stating that the agreement is of a continuing nature, providing for successive engagements. This will allow you to avoid having to file a new Designation of Accountant form each year, and does not preclude the annual renegotiation of fees and terms. Of course should you decide to change auditors, you will be required to file a Replacement of Accountant under Rule 17a-5(f)(3).
Designation of Accountant
As per SEC Rule 172-5(f)(2): Every broker or dealer that is required 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.In summary, you must have an executed engagement letter for your annual independent audits (which must be conducted by a PCAOB approved CPA firm) by December 1st, and if your engagement letter does not have language stating that it is of a continuing nature, providing for successive yearly audits.