Financial Reporting

Financial Reporting. A. Upon request, each broker-dealer must file audited financial statements with the Division as of the end of the broker-dealer’s fiscal year. The statements must meet the requirements of Subsection (B) of this Rule. B. The financial statements filed pursuant to this Rule must: 1. Include a balance sheet, a statement of income or operations, a statement of shareholder equity, and a statement of cash flows, and these should be accompanied by appropriate notes stating the accounting principles and practices followed in their preparation, the basis on which securities are included, and other notes as may be necessary for an understanding of the statements. 2. Be prepared in accordance with generally accepted accounting principles. 3. Be audited by an independent certified public accountant. The audit must: a. Be made in accordance with generally accepted auditing standards; and b. Include a review of the accounting system, the internal accounting controls, and procedures for the safeguarding of securities and funds including appropriate tests thereof since the prior examination. 4. Be accompanied by an unqualified opinion of the auditor as to the report of financial condition. In addition, the auditor shall submit as a supplementary opinion any comments, based upon the audit, as to any material inadequacies found to exist in the accounting system, the internal accounting controls, and procedures for safeguarding securities and funds, and shall indicate any corrective action taken or proposed. 5. Be filed with the Division within ninety (90) days following the end of the broker-dealer’s fiscal year. C. For a broker-dealer registered with the SEC, the financial reporting requirements of this Rule shall be limited to the financial reporting requirements in the Securities Exchange Act of 1934.