Statements of Position



Download Full Text (8.6 MB)


This proposed revised audit guide on brokers and dealers in securities was undertaken to reflect changes in industry practices and regulatory requirements that have occurred in recent years. The proposed guide describes operations, accounting practices and regulatory requirements unique to the brokerage industry, discusses unique aspects of the audit and illustrates the form and content of the financial statements and auditor's report. Also, the draft recommends new accounting and reporting practices relating to the valuation of future and forward transactions and unlisted options and to the presentation of subordinated debt and shareholders' equity in the financial statements. Significant changes in the guide are: 1. Discussion of the SEC's adoption of the FOCUS Report, which replaced the "Answers to Financial Questionnaire" with GAAP financial statements. 2. Prohibition against the combination of subordinated debt and shareholders' equity in the statement of financial condition. 3. An explanation of how to meet the SEC's requirements for a review of and report on internal accounting control and also meet the standards of SAS No. 30, "Reporting on Internal Accounting Control," and presentation of illustrative reports. 4. A new chapter discussing government and money market instruments, and a recommendation that all future and forward transactions should be marked-to-market currently, with the effect recorded in current results of operations. Also, the guide states that the gross amounts of future and forward commitments should be disclosed in the notes to financial statements rather than recording the future assets and liabilities. 5. Expanded discussion of listed options and a recommendation that unlisted options should be valued at fair value, as listed options currently are valued. 6. A discussion of the Commodity Futures Trading Commission in the chapter on commodities. 7. Presentation of illustrative financial statements and schedules that conform to the FOCUS reporting requirements and other SEC rules. 8. Illustrative auditors' reports on the financial statements and schedules that conform to the reporting guidance in SAS No. 29, "Reporting on Information Accompanying the Basic Financial Statements in Auditor-Submitted Documents." 9. Illustrative auditor's report qualified for a scope limitation, appropriate if the financial statements include securities valued by management and the auditor believes that, although the valuation procedures appear reasonable and the underlying documentation appropriate, the determination of fair value involves subjective judgment that is not susceptible to substantiation by auditing procedures.



Publication Date


Relational Format



Brokers -- Accounting; Disclosure in accounting


Accounting | Taxation


Originally published by: American Institute of Certified Public Accountants; Copyright and permission to reprint held by: American Institute of Certified Public Accountants; Exposure draft (American Institute of Certified Public Accountants), 1982, Dec. 27

Proposed audit guide : audits of brokers and dealers in securities ;Audits of brokers and dealers in securities



To view the content in your browser, please download Adobe Reader or, alternately,
you may Download the file to your hard drive.

NOTE: The latest versions of Adobe Reader do not support viewing PDF files within Firefox on Mac OS and if you are using a modern (Intel) Mac, there is no official plugin for viewing PDF files within the browser window.