Virginia Administrative Code › Title 21 - SECURITIES AND RETAIL FRANCHISING › Agency 5 - STATE CORPORATION COMMISSION › Chapter 20 - BROKER-DEALERS, BROKER-DEALER AGENTS AND AGENTS OF THE ISSUER › Part I - Broker-Dealers › Section 21VAC5-20-80 - Financial statements and reports

Current through Register Vol. 40, No. 24, July 15, 2024
A. All financial statements required for
				  registration of broker-dealers shall be prepared in accordance with generally
				  accepted accounting principles, as promulgated by the American Institute of
				  Certified Public Accountants.
B.
				  Definitions:
"Certified financial statements" means those financial
					 statements examined and reported upon with an opinion expressed by an
					 independent accountant and shall include at least the following
					 information:
1. Date of report, manual
				  signature, city and state where issued, and identification without detailed
				  enumeration of the financial statements and schedules covered by the
				  report;
2. Representations as to
				  whether the audit was made in accordance with generally accepted auditing
				  standards and designation of any auditing procedures deemed necessary by the
				  accountant under the circumstances of the particular case which may have been
				  omitted, and the reason for their omission; nothing in this section however
				  shall be construed to imply authority for the omission of any procedure which
				  independent accountants would ordinarily employ in the course of an audit for
				  the purpose of expressing the opinions required under this section;
3. Statement of the opinion of the accountant
				  in respect to the financial statements and schedules covered by the report and
				  the accounting principles and practices reflected therein, and as the
				  consistency of the application of the accounting principles, or as to any
				  changes in such principles which would have a material effect on the financial
				  statements;
4. Any matters to which
				  the accountant takes exception shall be clearly identified, the exemption
				  thereto specifically and clearly stated, and, to the extent practicable, the
				  effect of each such exception on the related financial statements given.
"Financial statements" means those reports, schedules and
					 statements, prepared in accordance with generally accepted accounting
					 principles and which contain at least the following information unless the
					 context otherwise dictates:
1.
				  Statement of Financial Condition or Balance Sheet;
2. Statement of Income;
3. Statement of Cash Flows;
4. Statement of Changes in
				  Stockholder's/Partner's/Proprietor's/Member's Equity;
5. Statement of Changes in Liabilities
				  Subordinated to Claims of General Creditors;
6. Schedule of the Computation of Net Capital
				  Under Rule 15c3-1 of the Securities Exchange Act of 1934 ( 17 CFR 240.15c3 - 1
				  );
7. Schedule of the Computation
				  for Determination of the Reserve Requirements under Exhibit A of Rule 15c3-3
				  and Information Relating to the Possession and Control Requirements under Rule
				  15c3-3 of the Securities Exchange Act of 1934 ( 17 CFR 240.15c3 - 3 ).
"Independent accountant" means any certified public
					 accountant in good standing and entitled to practice as such under the laws of
					 the accountant's principal place of business or residence, and who is, in fact,
					 not controlled by, or under common control with, the entity or person being
					 audited.
1. For purposes of this
				  definition, an accountant will be considered not independent with respect to
				  any person or any of its parents, its subsidiaries, or other affiliates in
				  which, during the period of the accountant's professional engagements to
				  examine the financial statements being reported on the date of the report, the
				  accountant or the firm or a member thereof had, or was committed to acquire,
				  any direct financial interest or any material indirect financial interest; or
				  in which, during the period of the accountant's professional engagements to
				  examine the financial statements being reported on, at the date of the report
				  or during the period covered by the financial statements, the accountant or the
				  firm or a member thereof was connected as a promoter, underwriter, voting
				  trustee, director, officer, or employee.
2. A firm will not be deemed not independent
				  in regard to a particular person if a former officer or employee of such person
				  is employed by the firm and such individual has completely disassociated
				  himself from the person and its affiliates covering any period of employment by
				  the person.
3. For partners in the
				  firm participating in the audit or located in an office of the firm
				  participating in a significant portion of the audit; and in determining whether
				  an accountant may in fact be not independent with respect to a particular
				  person, the commission will give appropriate consideration to all relevant
				  circumstances, including evidence bearing on all relationships between the
				  accountant and that person or any affiliate thereof, and will not confine
				  itself to the relationships existing in connection with the filing of reports
				  with the commission.
"Review of financial statements" means those financial
					 statements reviewed by an independent accountant, and shall include at least
					 the following:
1. Date of report,
				  manual signature, city and state where issued, and identification without
				  detailed enumeration of the financial statements and schedules covered by the
				  report;
2. Representations that the
				  review was performed in accordance with standards established by the American
				  Institute of Certified Public Accountants;
3. Representations that the accountant is not
				  aware of any material modification that should be made to the financial
				  statements in order for them to be in conformity with generally accepted
				  accounting principles, other than those modifications, if any, indicated in the
				  accountant's report.
"Unaudited financial statements" means those financial
					 statements prepared in a format acceptable to the commission not accompanied by
					 the statements and representations as set forth in the definitions of
					 "certified financial statements" or "review of financial statements" of this
					 subsection, and shall include an oath or affirmation that such statement or
					 report is true and correct to the best knowledge, information, and belief of
					 the person making such oath or affirmation. The oath or affirmation shall be
					 made before a person authorized to administer the oath or affirmation, and
					 shall be made by an officer of the entity for whom the financial statements
					 were prepared.