The Financial Industry Regulatory Authority is updating its electronic filing system to incorporate new amendments for reported income issued by the Securities and Exchange Commission.
The SEC amendments allow for new simplified reporting requirements for brokers and dealers as well as changing annual audit requirements under the electronic Financial and Operational Combined Uniform Single system, or eFOCUS.
FINRA said in its Regulatory Notice 18-38 that the new annual audit requirements apply to annual audit reports due for fiscal years ending in January 2019 and after.
The compliance date parameters were explained after the SEC Division of Trading and Markets staff stated in an Oct. 29 no-action relief letter it would not recommend enforcement action if broker-dealers continue to file the FOCUS Report without the new SEC amendments for reporting periods ending on or before Dec. 31, 2018.
The SEC no-action position doesn’t apply to FOCUS Reports and annual reports covering reporting periods ending after Dec. 31, 2018, the SEC staff noted in the letter.
For firms filing as of the last day of the month, the reporting requirements for FOCUS apply beginning with reports filed for the period ending Jan. 31, 2019, and after, FINRA explained by way of example.
BD members are required to file with FINRA reports concerning their financial and operational status using the FOCUS Report.
The SEC’s updates reflect updated requirements under U.S. Generally Accepted Accounting Principles that amend the Statement of Financial Condition and the “Statement of Income: in the FOCUS Reports.
The updated form adds new line items for the reporting of comprehensive income, including other comprehensive income and accumulated other comprehensive income. The amendments also eliminate references to extraordinary gains or losses and the cumulative effect of changes in accounting principles.
FINRA is posting resources on its website to help illustrate the eFOCUS System updates.
— Check out How to Avoid the Dreaded 8210 Letter From FINRA on ThinkAdvisor.