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CAQ Alert #2014-06 CAQ Broker and Dealer Alert

Monday, May 12, 2014

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This Alert, issued jointly by the Center for Audit Quality and the American Institute of CPAs, is intended to remind audit firms of certain auditing considerations in response to regulatory changes set forth by the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), as well as related guidance and standards issued by the Public Company Accounting Oversight Board (PCAOB). The changes identified in this Alert are applicable to audits and attestation engagements of Brokers and Dealers (broker-dealers) and Futures Commission Merchants (FCMs), including those entities that are dually-registered. This Alert specifically addresses the following:

1. SEC Amendments to Rule 17a-5 and PCAOB Attestation Standards No.1 and No. 2
2. PCAOB Auditing Standard No. 17, Auditing Supplemental Information Accompanying Audited Financial Statements
3. CFTC Customer Protection Rules for FCMs
4. CFTC-Registered Introducing Brokers
5. PCAOB’s Inspection Program and Smaller Broker-Dealer Forums
6. AICPA’s Peer Review Program
7. AICPA’s Stockbrokerage and Investment Banking Expert Panel

While the Alert highlights significant areas of change, it should not be relied upon as definitive or all-inclusive, and should be read together with the applicable rules, regulatory updates, standards, and guidance in their entirety. Further, auditors should discuss these changes with their broker-dealer and FCM clients and assess which changes are applicable based on the operations of the entity being audited and the regulatory agencies with which the entity is registered. The new rules addressed in the Alert are generally effective for audits and attestation engagements of broker-dealers and FCMs with fiscal years ending on or after June 1, 2014. Other changes in the rules have effective dates prior or subsequent to June 1, 2014; however, this Alert is intended to address the major changes effective on June 1, 2014.