CFR Correction to 17 CFR 240.17a-5(g)(1) Audit Objectives for Brokers and Dealers

SECURITIES AND EXCHANGE COMMISSION 17 CFR Part 240 General Rules and Regulations, Securities Exchange Act of 1934 CFR Correction In title 17 of the Code of Federal Regulations, part 240 to end, revised as of April 1, 1997, on page 369, in § 240.17a–5, paragraph (g)(1) is corrected to read as follows:

Federal Register / Vol. 62, No. 153 / Friday, August 8, 1997 / Rules and Regulations 42665 § 240.17a–5 Reports to be made by certain brokers and dealers.

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(g) Audit objectives. (1) The audit shall be made in accordance with generally accepted auditing standards and shall include a review of the accounting system, the internal accounting control and procedures for safeguarding securitiesincluding appropriate tests thereof for the period since the prior examination date. The audit shall include all procedures necessary under the circumstances to enable the independent public accountant to express an opinion on the statement of financial condition, results of operations, cash flow, and the Computation of Net Capital under § 240.15c3–1, the Computation for Determination of Reserve Requirements for Brokers or Dealers under Exhibit A of § 240.15c3–3, and Information Relating to the Posession or Control Requirements under § 240.15c3–3. The scope of the audit and review of the accounting system, the internal control and procedures for safeguarding securities shall be sufficient to provide reasonable assurance that any material inadequacies existing at the date of the examination in (a) the accounting system; (b) the internal accounting controls; (c) procedures for safeguarding securities; and (d) the practices and procedures whose review is specified in (i), (ii), (iii) and (iv) of this paragraph would be disclosed. Additionally, as specific objectives, the audit shall include reviews of the practices and procedures followed by the client:
(i) In making the periodic computations of aggregate indebtedness and net capital under § 240.17a–3(a)(11) and the reserve required by § 240.15c3– 3(e); (ii) In making the quarterly securities examinations, counts, verifications and comparisons and the recordation of differences required by § 240.17a–13; (iii) In complying with the requirement for prompt payment for securities of section 4(c) of Regulation T (§ 220.4(c) of chapter II of title 12) of the Board of Governors of the Federal Reserve System; and (iv) In obtaining and maintaining physical possession or control of all fully paid and excess margin securities of customers as required by § 240.15c3–
3. Such review shall include a
determination as to the adequacy of the procedures described in the records required to be maintained pursuant to § 240.15c3–3(d)(4).

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[FR Doc. 97–55509 Filed 8–7–97; 8:45 am] BILLING CODE 1505–01–D