Book description
It is critical to understand the complexities of the specialized accounting and regulatory requirements needed for the broker-dealer industry. This comprehensive guide has been designed to be beneficial for a wide range of professionals within the broker-dealer industry. Updates to this edition are to conform the content to current accounting standards and regulatory requirements. The updates include:
- SEC Release No. 34-86073, Amendment to Single Issuer Exemption for Broker-Dealers;
- ASU No. 2018-09, Codification Improvements; and,
- SEC Release Nos. 33-10532; 34-83875; IC-33203, Disclosure Update and Simplification.
In addition, this edition features a new example disclosure note for revenue from contracts with customers, which has been added to the guide's illustrative financial statements and footnote disclosures.
Table of contents
-
Chapter
- 1 The Securities Industry
-
2 Broker-Dealer Functions, Books, and Records
- Introduction
- Trade Execution
- Clearance and Settlement
- Specialized Clearance Activities
- Reconciliation and Balancing
- Custody
- Dividends, Interest, and Reorganization
- Collateralized Financing
- Regulatory Considerations
- Tax Information Reporting for Certain Customer Transactions
- Illustrative Stock Record Entries
-
3 Regulatory Considerations
- Applicable Rules
-
Explanation of Significant SEC Financial Responsibility Rules
- SEC Rule 15c3-3, “Customer Protection—Reserves and Custody of Securities”
- SEC Rule 15c3-1, “Net Capital Requirements for Brokers or Dealers”
- SEC Rule 15c3-1(e), “Notice Provisions Relating to the Limitations on the Withdrawal of Equity Capital”
- SEC Rule 17a-13, “Quarterly Security Counts to Be Made by Certain Exchange Members, Brokers, and Dealers”
- SEC Rule 17a-3, “Records to Be Made by Certain Exchange Members, Brokers, and Dealers”
- SEC Rule 17a-4, “Records to Be Preserved by Certain Exchange Members, Brokers, and Dealers”
- Regulation T and Maintenance Margin
- Account Statement Rule(s)
- SEC Rules and CFTC Regulations Governing Customer Margin for Transactions in Security Futures
- SEC Rules 17h-1T and 17h-2T
- SEC Rule 17Ad-17, "Lost Securityholders and Unresponsive Payees"
- SEC Rule 17Ad-22, “Clearing Agency Standards”
- SEC Rule 17-248—Subpart C, "Regulation S-ID: Identity Theft Red Flags"
- SEC Rule 506 of Regulation D and SEC Rule 144A
- SEC Rule 15c3-5, “Risk Management Controls for Brokers or Dealers with Market Access”
- SEC Rule 17a-5, “Reports to Be Made by Certain Brokers and Dealers”
- Anti-money Laundering Regulations
- Reporting Requirements
- Filings Concurrent With the Annual Audited Financial Report
- Other Reports
- Additional Requirements for Registered Investment Advisers
- Rules Applicable to Broker-Dealers in Commodities and U.S. Government Securities
- OTC Derivatives Dealers
- Swap Dealers and Swaps Marketplace Participants
- Annual Compliance Certification
- 4 Internal Control
-
5 Accounting Standards
-
Accounting Model
- Definition of Fair Value
- Application of Fair Value Measurement to Liabilities and Instruments Classified in a Reporting Entity’s Shareholders’ Equity
- Valuation Techniques
- Inputs to Valuation Techniques
- Application to Financial Assets and Financial Liabilities With Offsetting Positions in Market Risks or Counterparty Credit Risk
- Inputs Based on Bid and Ask Prices
- Present Value Techniques
- The Fair Value Hierarchy
- Fair Value Measurements of Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent)
- Fair Value Determination When the Volume or Level of Activity Has Significantly Decreased
- Fair Value Option
- Additional Fair Value Considerations
- Trade-Date Versus Settlement-Date Accounting
-
Statement of Financial Condition Considerations
- Due From, and Due to, Other Broker-Dealers and Clearing Entities
- Transfers of Financial Assets
- Exchange Memberships Owned or Contributed
- Suspense Accounts
- Derivatives
- Conditional Transactions
- Leveraged Buyouts and Bridge Loans
- Asset Securitizations
- Variable Interest Entities
- Soft-Dollar Arrangements
- Mandatorily Redeemable Instruments
- Statement of Income or Loss Considerations
- Revenue Recognition: Application of FASB ASC 606
-
Accounting Model
-
6 Financial Statement Presentation and Classification
- Introduction
- Financial Statements
-
Supplementary Schedules
- Computation of Net Capital Pursuant to SEC Rule 15c3-1
- Computations for Determination of Reserve Requirements Pursuant to SEC Rule 15c3-3
- Information Relating to Possession or Control Requirements Under SEC Rule 15c3-3
- Schedules of Segregation Requirements and Funds in Segregation for Customers’ Trading Pursuant to the Commodity Exchange Act
-
Statement of Financial Condition Account Descriptions
- Cash and Securities Segregated Under Federal and Other Regulations
- Memberships in Exchanges
- Securities Sold Under Agreements to Repurchase and Securities Purchased Under Agreements to Resell
- Securities Borrowed and Securities Loaned
- Securities Received as Collateral and Obligation to Return Securities Received as Collateral
- Receivables From and Payables to Broker-Dealers, Clearing Organizations, and Others
- Receivables From and Payables to Customers
- Deferred Dealer Concessions
- Securities Owned and Securities Sold, Not Yet Purchased
- Other Borrowed Funds
- Subordinated Borrowings
- Commitments and Guarantees
- Equity
-
Statement of Income or Operations Account Descriptions
- Commission Income and Related Expense
- Interest Income and Interest Expense
- Dividend Income and Dividend Expense
- Principal Transactions (Trading Gains and Losses)
- Investment Banking Fees and Expenses
- Asset Management and Investment Advisory Income
- Distribution Fees
- Floor Brokerage, Exchange Fee, and Clearance Expenses
- Occupancy and Equipment Expenses
- Employee Compensation and Benefits Expenses
- Technology and Communications Expense
- Management and Allocated Corporate Overhead Expense
-
Disclosures
- Fair Value Disclosures
- Disclosures Related to Transfers of Financial Assets Accounted for as Sales
- Disclosures Related to Transfers of Financial Assets Accounted for as Secured Borrowings
- Disclosures of Certain Significant Risks and Uncertainties and Contingencies
- Derivative Instruments Disclosures
- Guarantee Disclosures
- Related Party Disclosures
- Subsequent Events Disclosures
- Balance Sheet Offsetting Disclosures
- Financial Statements and Schedules
-
Appendix
- A Information Sources
- B Illustrative Example of Compliance Report Required by SEC Rule 17a-5
- C Illustrative Example of Exemption Report Required by SEC Rule 17a-5
- D The New Leases Standard: FASB ASC 842
- E Accounting for Financial Instruments
- F Schedule of Changes Made to the Text From the Previous Edition
- Glossary
- End User License Agreement
Product information
- Title: Accounting Guide
- Author(s):
- Release date: November 2019
- Publisher(s): Wiley
- ISBN: 9781948306669
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