Effective Date: December 31, 2021
Year-end audits of introducing brokers: no requirement to perform special compliance procedures for segregation of client securities
In the course of a year-end audit of any introducing broker, auditors are not required to perform special compliance procedures in regards to security segregation and report on any findings.
This regulatory position is based on the fact that the carrying broker is also subject to an audit, which includes special compliance procedures as they relate to the segregation of client fully paid and excess margin securities. This testing includes the securities of the accounts of the introducing broker.
In respect to Canadian generally accepted auditing standards (GAAS), auditors must assess in the course of their audit as to whether any form of comfort is required to be obtained from the auditors of the carrying broker in respect to any of the terms set out in the introducing broker / carrying broker agreement.
IIROC Rules this Guidance Note relates to:
- Rule 2400,
- Rule 4300,
- Rule 4400, and
- Form 1, Part II.
Previous Guidance Note
This Guidance Note replaces Financial Compliance Notice FC 98-01.
This Guidance Note was published under Notice 21-0190 - IIROC Rules, Form 1 and Guidance.