Did you know that September is National Preparedness Month? Emergencies can happen at anytime and anywhere. Ready Business is a resource that assists businesses in developing a preparedness program by providing tools to create a plan that addresses the impact of various hazards. Preparedness is the key to ensuring that your business will continue after a disaster.
In light of this national observance, our blog is focusing on preparedness and preparing for an audit. We understand that the arrival of FINRA examiners at your firm may cause some concern—especially if it’s your first examination, or if it has been a while since your last audit.
How can I help my firm prepare for a FINRA audit?
Tell your staff about the audit. This also helps those staff members that FINRA needs to contact, identify and prepare the records and information that they need to have available when the audit begins.
Review past audits. If your firm has been audited in the past, it is worth reviewing the last audit report. Often past audits have recommendations for improvements. In conducting routine audits, FINRA’s purpose is to identify opportunities for improvement, which are in the best interests of the firm being audited and their clients.
Identify an audit contact person who can act as a liaison person to work directly with the auditor. This staff member should be responsible for ensuring that auditors have access to records and files or any other resources needed to complete the audit. This person acts as the main point of contact as the audit progresses so that FINRA can continue to keep your firm informed of how the work is going. Your firms’ contact person may find it useful to schedule meetings with FINRA periodically throughout the audit process to help monitor how things are progressing. This is a good way to facilitate communication, resolve issues on a timely basis, and correct any misunderstandings.
Cooperation is essential to a successful audit. Depending on the type of exception, if your firm can demonstrate swift corrective action, it may not appear in the final Examination Report.
Assemble appropriate and current information about your firm that you think might help FINRA in gaining an understanding of your administrative structure, nature of your operations, and knowledge of employee roles and responsibilities. Other information that might be helpful to have on hand could include key procedures or policies, organization charts and financial information such as budgets and sample management reports.
Hot Topics. FINRA is really focusing on social media and cyber security preparedness as part of their audits right now. Are you prepared to respond (with proper documentation) to a regulator when they inquire with regards to your supervision preparedness? Are you finding everything that you are required to monitor? Do you know for certain that your employees have properly disclosed all OBAs? Being prepared to address these "hot topics" will help in the event that you are audited.
A FINRA audit is an excellent opportunity to take a thorough look at the risks impacting your business and the controls put in place to mitigate those risks.
Please note that these are only general steps recommended to prepare for an audit. We recognize that specific steps and information requests that are unique to your firm will be identified and communicated to you as you interact with auditors.
About James Cella
James Cella is the President of a growing and innovative compliance technology provider called SiteQuest Technologies. James is a customer-centric individual and focuses on building and sustaining positive and lasting relationship with his clients and partners. James and his family are "super fans" of Utah Football and have attended nearly every home game since 2002. Go Utes!