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Division of Securities & Retail Franchising


FAQs - Broker-Dealer Audits

1. Does an audit indicate wrongdoing by the broker-dealer?

2. Do I need to prepare for an audit?

3. How long will an audit last?

4. What if records are maintained in an electronic medium?

5. How does the Division treat information obtained during an audit?

6. What happens if a broker-dealer or its representative fails to allow immediate access to records or refuses to provide information requested by the auditors?

7. What happens if I fail to correct deficiencies in the audit letter?

8. Who should a broker-dealer contact with questions or comments regarding an audit?

 

 

 

 

 

1. Does an audit indicate wrongdoing by the broker-dealer?

A. No. Targets are selected based on a vast list of criteria and geographic location.

2. Do I need to prepare for an audit?

A. If the auditor has contacted you for an appointment, you will be provided with the Record Request List. Please have the listed items available for inspection. The Person in Charge ("PIC") should be available for the auditor(s) for an hour to an hour and a half at the commencement of the audit.

3. How long will an audit last?

A. It all depends. Audits may be completed in one day or it may take several. Generally, broker-dealers can expect to be involved in an audit for at least two days.

4. What if records are maintained in an electronic medium?

A. Auditors may access and print such records, or download such records in electronic form. When records are kept on-site in electronic format, the broker-dealer must also have the ability to make those electronic records available for immediate and complete access by auditors.

5. How does the Division treat information obtained during an audit?

A. Pursuant to Virginia Code Section 13.1-518 B, information or documentation prepared or obtained during an audit shall be deemed confidential and shall not be disclosed to the public. The information may, however, be provided to other law enforcement or regulatory agencies, it may be used in connection with an official proceeding, or made available in compliance with other applicable law.

6. What happens if a broker-dealer or its representative fails to allow immediate access to records or refuses to provide information requested by the auditors?

A. The matter will be referred to the State Corporation Commission’s Office of General Counsel.

7. What happens if I fail to correct deficiencies in the audit letter?

A. Repeat deficiencies noted in future audits could very likely result in formal enforcement action.

8. Who should a broker-dealer contact with questions or comments regarding an audit?

A. For questions or concerns regarding specific audits already conducted, broker-dealer personnel should contact the auditor(s) that audited their firm. The Chief Auditor of the Division of Securities and Retail Franchising may also be contacted at 804-371-9051.