How to Prepare a Broker-Dealer FOCUS Report
A practical preparation guide for broker-dealer operators who need their books, net capital computation, supporting schedules, and regulatory filing to agree.
General information for broker-dealer operators and compliance teams
Start With the Applicable Filing Requirement
FOCUS report preparation in brief: confirm the applicable form and reporting period, close and reconcile the books, update the net capital computation, tie each reported amount to supporting records, complete the required review, and retain the submitted filing with its workpapers.
FOCUS stands for Financial and Operational Combined Uniform Single. This guide explains the preparation workflow; it is not a substitute for the instructions attached to the firm's applicable form.
Before preparing a FOCUS report, confirm which report and schedules apply to the firm, the reporting period, the due date, and the people responsible for preparation, review, approval, and submission. The requirements can vary based on the firm's activities, customer-account structure, clearing arrangement, and financial-responsibility obligations.
FINRA member firms submit FOCUS reports through eFOCUS pursuant to applicable SEC requirements. FINRA's eFOCUS resource provides current forms, filing information, and technical guidance. The firm's regulatory calendar should reflect the requirements that apply to its specific registration and business model.
Close and Reconcile the Books
Complete the period close before building the filing. Review the general ledger and trial balance, record required accruals and adjusting entries, and investigate unusual or stale balances.
At a minimum, reconcile the accounts and schedules that support the firm's financial statements and regulatory computations. These commonly include:
- Bank and clearing accounts
- Revenue and commission activity
- Accounts receivable and payable
- Prepaid expenses and fixed assets
- Compensation and expense accruals
- Capital contributions, withdrawals, and subordinated liabilities
- Related-party balances
- Supporting schedules used for net capital and other regulatory reporting
Document unresolved items and determine whether they affect the filing. A clean reporting process should leave a clear trail from source records to the general ledger, financial statements, computations, and FOCUS schedules.
Update the Net Capital Computation
Prepare the net capital computation from current, reconciled records. Confirm the firm's minimum requirement and evaluate tentative net capital, non-allowable assets, applicable haircuts, operational deductions, liabilities, and any concentration or contractual effects relevant to the firm.
Compare the result with the firm's early-warning and internal operating thresholds. Consider known activity after the reporting date, including expenses, revenue changes, capital movements, planned distributions, or transactions that could alter the firm's position.
The SEC maintains consolidated guidance on broker-dealer net capital, books and records, customer protection, FOCUS reporting, and annual audits. Review the SEC's broker-dealer financial responsibility resources.
Prepare, Review, and Tie Out the FOCUS Report
Populate the applicable FOCUS report using the finalized financial information and regulatory computations. Each reported amount should tie to the trial balance or a documented supporting schedule.
The review should address more than mathematical accuracy. Compare the filing with prior periods, investigate unexpected changes, confirm classifications, verify required schedules, and make sure narrative or supplemental information is complete. Reconcile the final report back to the books and retain the supporting workpapers with evidence of review.
Before submission, confirm that the filing reflects the approved numbers, the required signoffs are complete, and the person submitting the report is using the correct reporting period and form.
Common preparation issues to investigate include unreconciled cash, stale receivables, missing expense accruals, unsupported classifications, and differences between the trial balance and filing schedules. Maintain an exception log with an owner, resolution, and reviewer for each open item rather than carrying unexplained differences into the final package.
If your team needs help connecting the close process to the filing, review my FOCUS reporting and net capital support for introducing broker-dealers. For ongoing principal coverage, see outsourced Series 28 FINOP services.
Retain a Complete Filing Package
Preserve the submitted report, acceptance confirmation, final trial balance, financial statements, net capital computation, reconciliations, adjusting entries, supporting schedules, review evidence, and documentation for significant judgments or exceptions.
A complete package supports the next filing, annual audit, internal supervision, and responses to regulatory questions. It also makes the process less dependent on one person's memory and helps management see recurring close or control issues.
Broker-Dealer FOCUS Report Questions
Common questions about preparing and supporting a FOCUS filing.
Where can I find FOCUS report instructions and filing deadlines?
Use FINRA's eFOCUS resources and the instructions for the firm's applicable form and schedules. Confirm the reporting period and current deadline in the firm's regulatory calendar rather than assuming every broker-dealer has the same filing requirements.Can a FOCUS report be prepared before the books are closed?
Preliminary work can begin earlier, but the final report should be based on complete and reconciled records. Material adjustments made after the report is prepared should be evaluated and reflected before submission when required.What should be reviewed before a FOCUS report is filed?
Confirm that reported amounts agree with the books and supporting schedules, classifications are appropriate, the net capital computation is current, period changes have been investigated, and the required schedules, approvals, and filing information are complete.Who is responsible for the accuracy of the filing?
FINRA Rule 1220 assigns the FINOP final responsibility for the accuracy and preparation of financial reports submitted to securities industry regulators. The firm's management, accounting personnel, and other contributors must still provide timely, complete, and accurate information.Need Help With FOCUS Reporting or Net Capital?
I provide Series 28 FINOP consulting for introducing broker-dealers that need a more reliable reporting process, ongoing net capital monitoring, interim coverage, or support around an upcoming filing or examination.