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Small Business Audit Correction Act of 2018 - Sample Letter (Requesting Support)




Re    The Small Business Audit Correction Act of 2018


The regulatory burden for small businesses in my industry is substantial, and it has gotten to a point where small firms are struggling to survive. While we have seen increases in regulations in many areas, possibly the most unreasonable and unfair is that a small brokerage firm, like mine, is being held to PCAOB audit standards. The Public Company Accounting Oversight Board (PCAOB) was established by Congress in 2002 to oversee the audits of public companies in order to protect investors. However, in 2010, The Dodd-Frank Act expanded the PCAOB’s oversight to include the annual audits of all brokers and dealers registered with the Securities and Exchange Commission, irrespective of size.  The result is that my small, independently owned brokerage firm is now held to the same auditing standards as a publicly traded company.  

The PCAOB audit requirement makes complete sense for public companies and Broker/Dealers that carry customer funds or securities, like JP Morgan or Morgan Stanley, because the investing public and markets are potentially at much greater risk from these companies. The PCAOB is also the right fit for Brokers/Dealers that carry customer funds and securities. Conversely, the PCAOB requirements make no sense for privately-held, small non-custodial firms. Currently, a 3-person small business is held to the same standards as Merrill Lynch; this is not right, fair or reasonable. The one-size-fits-all PCAOB audit standards that were designed for significantly more complex companies, and are priced accordingly, have inflicted substantial harm to small businesses around the country in both the investment and accounting industries. We simply cannot sustain the human and financial resource burden that these audits place on our small firms and we need legislative relief, and we need it now.

Every year we prepare financial statements at the end of our fiscal year and have them audited by an independent accounting firm before submitting them to the SEC. But now the financial statements must be audited by a PCAOB firm, and our costs have increased dramatically. The PCAOB audits dive into granular-level detail that has nothing to do with the financial soundness of our business or the services we provide to our clients. Our firm and our clients are no better off by adhering to these standards, and the increasing costs in both time and money are forcing many small firms out of business.   

The Small Business Audit Correction Act of 2018 (Act) therefore requests a specific exemption for privately held, non-custodial brokers and dealers in good standing from the requirement to hire a Public Company Accounting Oversight Board (PCAOB)-registered audit firm.

Please place value on small businesses. I am hopeful that legislative and regulatory reform will ease some of the burdens on firms like mine and make it possible to stay in business. Investment professionals should be able to focus on providing services to our clients rather than spending all of our time and money adhering to government-imposed regulations that do little if anything to improve the quality of our industry and do not provide enhanced customer protection.

I am one of your small business owner and operator constituents and I am asking for your help with this bipartisan issue of helping small businesses. Please help my firm and our community of small businesses by supporting our efforts to get the Small Business Audit Correction Act of 2018 supported in Committee, brought to the floor of the House and Senate, and passed. Passing this Act will provide significant and much needed relief for small businesses and our customers in our state and around the country. 

Thank you,



Encl    Small Business Audit Correction Act_Summary (education piece)
           Small Business Audit Correction Act of 2018 (Bill)


Paige Pierce