Focus report "is the fundamental reporting form used by broker-dealers to report financial conditions to the regulatory agencies" (The Securities Institute of America, Inc., 2015, s. 89). More specifically it is called a SEC Form X-17A-5 and it must be completed by all broker-dealers registered with the U.S. Securities and Exchange Commission (SEC). This form consists of three parts stated below and includes an annual audit, which should be carried by a certified public accountant (CPA).
It is submitted electronically and includes all of the following parts (The Securities Institute of America, Inc., 2015, s. 89):
- FOCUS Part I is an outline of key indicators and financial numbers (or shortly - abbreviated listing of essential and most important data) that are submitted monthly within 10 working days after the end of the month by intermediaries maintaining customer accounts;
- FOCUS Part II is the balance sheet, profit and loss account and quarterly net capital calculations(it is more detailed reporting including a balance sheet and income statement). Any broker who clears customer accounts must submit this part within 17 business days of the end of each calendar quarter;
- FOCUS Part IIA is submitted quarterly. Any broker who does not maintain or delete customer accounts only needs to submit an application FOCUS Part II A within 17 working days after the end of every quarter (The Securities Institute of America, Inc., 2015, s. 89).
Rule of focus report
Rule 17a-5 also necessitate from brokers who maintain client accounts to provide customers with financial statements twice a year. One of them will be the audited financial statements, which must also be submitted to the SEC no later than 60 days after the date of the mentioned document (the financial statement). The report should be dispatched to clients within 45 days from the date of sending the report to the SEC. The second report will be an unaudited statement consigned about half year later. Current balance sheets should be made available to bona fide customers upon their request. Broker dealers also should (within 105 days after the date of report) furnish customers with the following data(The Securities Institute of America, Inc., 2015, s. 89):
- "Unconsolidated balance sheet with relevant notes prepared in accordance with generally accepted accounting principles;
- Statement containing the company's net capital and its required net capital;
- A statement indicating the existence of any material shortcomings in the accounting system, internal accounting control or the procedures for safeguarding securities;
- A statement indicating that Part I of the FOCUS report is available for copying at the headquarters of the broker-dealer and the SEC regional office" (The Securities Institute of America, Inc., 2015, s. 89):.
Summing up, the FOCUS report is the basic financial and operational report required of all brokers or dealers. Instructions should be used in the preparation of this report and are stated as an integral part of this report. And it also can be referred to as a Financial and Operational Combined Uniform Single Report.
- Shewbridge C., Ehren M., Santiago P., Tamassia C. (2012), OECD Reviews of Evaluation and Assessment in Education, OECD Publishing, Luxemburg, s. 112
- The Securities Institute of America Inc. (2015), Wiley Series 99 Exam Review 2015 + Test Bank: The Operations Professional Qualification Examination, Wiley & Sons Inc., Hoboken, s.89
- United States Securities and Exchange Commission (2005), CCH SEC Docket, CCH Incorporated, Chicago, s. 299
Author: Urszula Bochenek