Defining Issues: Broker-Dealers and Their Auditors Face New Requirements

The SEC recently proposed amendments to its broker-dealer financial reporting rule aimed at strengthening independent audits and enhancing oversight of broker-dealer custody practices. While the proposed amendments would have the most dramatic effect on broker-dealers that maintain custody of customers’ assets, all broker-dealers would be affected to some extent. Comments on the proposed amendments are due 60 days after publication in the Federal Register. Also, under new rules recently approved by the PCAOB, auditors of broker-dealers will be subject to a temporary inspection program for their audits, and non-issuer broker-dealers will be charged a portion of the PCAOB’s accounting support fee. The SEC must approve these new rules.