Statements of Position



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This proposed audit and accounting guide has been prepared to assist preparers of financial statements of broker-dealers in securities and independent auditors in auditing and reporting on those financial statements. Generally accepted accounting principles (GAAP) and generally accepted auditing standards (GAAS) apply to the financial statements of broker-dealers in securities. This proposed guide would supersede the AICPA Audit and Accounting Guide Audits of Brokers and Dealers in Securities, issued in 1985. This proposed guide does not address the general application of those standards; rather, it focuses on special matters unique to auditing and reporting on the financial statements of broker-dealers. The proposed guide describes the conditions or procedures unique to the industry and illustrates the form and content of broker-dealer financial statements and related disclosures. Included are discussions of business activities, accounting records, internal controls and procedures for safeguarding customer assets including securities, and unique aspects of the audit, as well as illustrations of various financial statements and independent auditors' reports; however, detailed internal control questionnaires and audit programs are not included. This proposed guide is a complete revision of the 1985 AICPA Industry Audit Guide Audits of Brokers and Dealers in Securities, including all applicable statements of position issued prior to July 1, 1994. The form of financial reporting of broker-dealers required under GAAP and in accordance with the requirements established by the regulatory or self-regulatory bodies is intended to meet the needs of customers who do business with these securities concerns, the needs of regulatory bodies and lenders, and the needs of stockholders of firms with public ownership. Broker-dealers in securities are subject to regulation under the Securities Exchange Act of 1934. Some broker-dealers are also futures commission merchants for commodity futures and commodity option contracts subject to regulation under the Commodity Exchange Act. The AICPA is preparing an industry audit and accounting guide. Audits of Futures Commission Merchants and Commodity Pools, to provide guidance relating to commodity activities performed by broker-dealers and futures commission merchants. Members of the National Association of Securities Dealers, Inc. (NASD) are subject to the rules of that association, and members of securities exchanges are also subject to the rules of the exchanges of which they are members. Some of these rules, as currently in effect, are discussed in this guide. However, the rules, regulations, practices, and procedures of the securities and commodities futures industries have changed frequently and extensively in recent years. Still further changes are under consideration as this guide goes to press, and the independent auditor should keep abreast of these changes. This publication is a guide in determining the scope and nature of the work for each individual audit. It is not intended to limit or supplant individual judgment, initiative, imagination, and vigilance. Programs for each audit should be designed to meet the requirements of the particular situation, giving consideration to the size and type of organization and its internal control structure; this is a matter that should be determined by the exercise of professional judgment in light of circumstances present in a particular case. Users of this proposed guide should be aware that certain issues affecting broker-dealers in securities have not been included in this guide or are currently under study. Such issues include proposed Financial Accounting Standards Board (FASB) Statements of Financial Accounting Standards, Disclosures About Derivative Financial Instruments and Hedging and Hedge Accounting, and AICPA proposed Statement on Auditing Standards, Using the Work of a Specialist. As these issues are resolved, amendments to the proposed guide may be issued. This proposed guide includes illustrations of the form and content of financial statements for brokers and dealers and the auditor's report thereon.

Publication Date


Relational Format



Stockbrokers -- Auditing; Brokers -- Auditing; Disclosure in accounting; Financial statements -- Auditing -- Standards; Securities industry -- Auditing


Accounting | Taxation


Originally published by: American Institute of Certified Public Accountants; Copyright and permission to reprint held by: American Institute of Certified Public Accountants.

Proposed audit and accounting guide : audits of brokers and dealers in securities ;Audits of brokers and dealers in securities; Exposure draft (American Institute of Certified Public Accountants), 1994, Aug. 16



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