The House Financial Services Committee advanced last week the Small Business Audit Correction Act, which is designed to provide regulatory relief for small investment broker-dealers.
The bill, introduced by Rep. French Hill (R-AR), provides an exception from certain audit requirements and reinstates previous regulations.
“Often when we discuss regulatory relief in the financial services arena, we are talking about it in the vein of community banking, but so many other types of financial institutions are in need of regulatory relief, including privately-held, small non-custodial broker-dealers, which are often the gateway to the markets for Main Street businesses,” French said. “That is why I am pleased the Committee advanced my bill to provide relief to these small businesses because the current regulatory one-size-fits-all requirements has heaped additional costs and has inhibited growth for these small firms with limited human and financial resources.”
Officials said regulations require all investment broker-dealers, regardless of size, to hire an audit firm registered with the Public Company Accounting Oversight Board (PCAOB) to conduct audits using significantly more complex guidelines designed for larger, public companies.
The bill would narrowly tailor for privately held, small non-custodial broker-dealers in good standing an exception from the requirement to hire a PCAOB-registered audit firm to meet their annual SEA Rule 17a-5 reporting obligation, and would reinstate the previous regulatory audit requirements.