What Does FINRA Expect from Broker-Dealers During an Audit?
There is essentially three things FINRA will demand during an audit:
One: Reproduce the communications made from registered reps to clients. The key here, especially for small firms is to first clearly define through a communications policy what method reps will use to work with client. For example, if the policy defines email and Facebook, then only electronic records stored on these systems need to be supplied to auditors.
Two: Reproduce data relating to Books and Records. This data can be in any format depending on the systems used by the firm, but will be contained in:
Asset and Liability Ledgers
Trial Balances and various other related documents
Many of the records, including communications that relate to the broker-dealer’s business as such, must be retained for three years; certain other records must be retained for longer periods
Three: Documentation. And finally, firms will need to provide the following documentation to FINRA in order to satisfy SEC Rule 17a-4: The Two FINRA third party storage notification letters from the FINRA designated third party provider (D3P), the agreement from the D3P and the firm, and a business continuity plan outlining how the firm will recovery from a minor or major disaster.