A Financial and Operations Principal (FinOp) assists broker-dealer firms with their financial responsibilities, including regulatory reporting. Regulations require that a firm work with a financial officer who has received FINRA 27 certification. Outsourcing is a solution that allows you to meet the requirement, and you won’t need to hire an in-house officer. Here is more information about the functions of a FinOp in financial reporting and analysis:
Recording Guidance
A FinOp helps new firms set up their record-keeping processes to prepare for FINRA membership. They can act in an advisory role, offering assistance for setting up books and records in a new firm. A Financial and Operations Principal is also able to assist with compiling books for different financial records required for the FINRA application. These include balance sheets, trial balances, Profit and Loss statements, and other documents. FinOps help set up accounting software by preparing the first chart of accounts for the software to use; they also offer accounting guidance relating to the FinOp role during the Supervisory Procedures Manual preparation.
Supervisory Role
The financial officer assists in the preparation of financial reports, and they supervise those who are responsible for maintaining the financial records and statements on which the reports are based. This supervisory role includes being responsible for individuals who run the firm’s back-office operations, including those involved in administration and maintenance roles. The Financial and Operations Principal makes sure that the financial back-office tasks are done by personnel who have been registered with FINRA or have submitted fingerprints.
Back office personnel who require FINRA registration include senior management, supervisors, and personnel who are able to commit a member’s capital. Personnel working in a support position are only required to have submitted their fingerprints to FINRA to work as Non-Registered Fingerprinted personnel. The supervisory role of a Financial and Operations Principal may also include tasks such as answering questions, preventing inaccurate or fraudulent reporting, and assisting with accounting.
Net Capital Computation and Compliance
A Financial and Operations Principal has the responsibility of regularly computing the net capital of the firm, or its liquidity, and they make sure that it maintains enough net capital. This maintenance helps prevent the regulatory consequences of falling below the minimum requirement. SEC Rule 15c3-1 and FINRA requirements help set the net capital requirements. During the initial development of the firm, a financial partner can also assist with capital structure formation and the amount of required capital.
The net capital rule requires that information be available and accurate. The firm is required to either submit the net capital computation to regulators at the end of the month or on a quarterly basis. Your firm’s FinOp will typically submit this information as an electronic Financial and Operational Combined Uniform Single report; this may be due 17 days after the end of the period.
Regulatory Report Filing
The firm is required to submit forms to regulators by specific deadlines. Financial and Operations Principals complete the final report preparation and filing, and they are responsible for the accuracy of the reports. FinOps offer the final approval for reports submitted to securities industry regulatory organizations. Finding a financial partner that offers multiple reviews for deliverables helps with accuracy.
A FinOp submits the required Financial and Operational Combined Uniform Report. They are also responsible for the Supplemental Statement of Income and Securities Investor Protection Corporation documents; these include Schedule I, Form Custody, and schedule-off balance sheets. Some documents are required on a monthly basis, while others have quarterly or annual deadlines.
A Financial and Operations Principal also prepares annual financial statements to be audited by another accounting firm. A FinOp acts as a liaison between your firm and independent auditors, and they offer details about the firm’s activities and financial information. They also provide supporting documentation.
Work With a FinOp
As part of the monthly requirements, the financial officer should provide oversight of accounts receivable and review bank reconciliations. The Financial and Operations Principal makes sure that your firm adheres to SEC and FINRA requirements; they also help make sure that your firm follows state and federal laws. Working with a Financial and Operations Principal helps your firm to remain compliant. To receive assistance with your firm’s reports, find a trustworthy FinOp today.
