97-55509. General Rules and Regulations, Securities Exchange Act of 1934

[Federal Register Volume 62, Number 153 (Friday, August 8, 1997)]
[Rules and Regulations]
[Pages 42664-42665]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-55509]


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SECURITIES AND EXCHANGE COMMISSION

17 CFR Part 240


General Rules and Regulations, Securities Exchange Act of 1934

CFR Correction

    In title 17 of the Code of Federal Regulations, part 240 to end, 
revised as of April 1, 1997, on page 369, in Sec. 240.17a-5, paragraph 
(g)(1) is corrected to read as follows:

[[Page 42665]]

Sec. 240.17a-5  Reports to be made by certain brokers and dealers.

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    (g) Audit objectives. (1) The audit shall be made in accordance 
with generally accepted auditing standards and shall include a review 
of the accounting system, the internal accounting control and 
procedures for safeguarding securitiesincluding appropriate tests 
thereof for the period since the prior examination date. The audit 
shall include all procedures necessary under the circumstances to 
enable the independent public accountant to express an opinion on the 
statement of financial condition, results of operations, cash flow, and 
the Computation of Net Capital under Sec. 240.15c3-1, the Computation 
for Determination of Reserve Requirements for Brokers or Dealers under 
Exhibit A of Sec. 240.15c3-3, and Information Relating to the Posession 
or Control Requirements under Sec. 240.15c3-3. The scope of the audit 
and review of the accounting system, the internal control and 
procedures for safeguarding securities shall be sufficient to provide 
reasonable assurance that any material inadequacies existing at the 
date of the examination in (a) the accounting system; (b) the internal 
accounting controls; (c) procedures for safeguarding securities; and 
(d) the practices and procedures whose review is specified in (i), 
(ii), (iii) and (iv) of this paragraph would be disclosed. 
Additionally, as specific objectives, the audit shall include reviews 
of the practices and procedures followed by the client:
    (i) In making the periodic computations of aggregate indebtedness 
and net capital under Sec. 240.17a-3(a)(11) and the reserve required by 
Sec.  240.15c3-3(e);
    (ii) In making the quarterly securities examinations, counts, 
verifications and comparisons and the recordation of differences 
required by Sec. 240.17a-13;
    (iii) In complying with the requirement for prompt payment for 
securities of section 4(c) of Regulation T (Sec. 220.4(c) of chapter II 
of title 12) of the Board of Governors of the Federal Reserve System; 
and
    (iv) In obtaining and maintaining physical possession or control of 
all fully paid and excess margin securities of customers as required by 
Sec. 240.15c3-3. Such review shall include a determination as to the 
adequacy of the procedures described in the records required to be 
maintained pursuant to Sec. 240.15c3-3(d)(4).
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[FR Doc. 97-55509 Filed 8-7-97; 8:45 am]
BILLING CODE 1505-01-D