Bill Overview
Title: Small Business Audit Correction Act of 2022
Description: This bill exempts certain privately held, noncustody brokers and dealers in good standing from specified audit report requirements of the Public Company Accounting Oversight Board.
Sponsors: Sen. Cotton, Tom [R-AR]
Target Audience
Population: Individuals associated with privately held, noncustody brokers and dealers
Estimated Size: 30000
- This bill targets privately held, noncustody brokers and dealers, which means it does not apply to publicly held companies or those with custody of client funds.
- The exemption from audit requirements primarily affects the companies' operations and financial reporting obligations.
- There are approximately 3,600 broker-dealers registered with the Financial Industry Regulatory Authority (FINRA), but not all are privately held or noncustody.
- A significant number of private broker-dealers likely qualify under 'in good standing' criteria, reducing the overall pool.
- The global population directly impacted consists of business owners and employees working within these privately held broker-dealers.
Reasoning
- The target population is primarily privately held, noncustody brokers and dealers. This means the policy will not affect publicly held companies or those with custody of funds, hence the total affected population could be smaller than the total registered brokers and dealers.
- The budget constraints imply there is no direct financial allocation to increase well-being in the first ten years, thus the impact on well-being is more about regulatory change and less about financial benefits.
- Given the nature of the bill, any changes to well-being are likely to be indirect via reduced compliance costs or altered business operations, only noticeable by those directly involved in financial oversight or audit processes.
Simulated Interviews
Owner of a small brokerage firm (New York, NY)
Age: 45 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 5.0 years
Commonness: 5/20
Statement of Opinion:
- This policy sounds like it would reduce some of our compliance costs, which is a small relief.
- I don’t expect huge changes immediately, but it’s good to see a movement towards recognizing the strain excessive requirements place on small businesses.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 8 | 6 |
| Year 5 | 8 | 6 |
| Year 10 | 7 | 6 |
| Year 20 | 7 | 5 |
Compliance Manager (Chicago, IL)
Age: 50 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 6/20
Statement of Opinion:
- Reduced auditing requirements might make my job less stressful, giving us room to focus on other issues.
- Hopefully, this changes the focus from compliance to business growth.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 8 | 6 |
| Year 3 | 8 | 5 |
| Year 5 | 8 | 5 |
| Year 10 | 8 | 5 |
| Year 20 | 8 | 5 |
Junior Accountant (San Francisco, CA)
Age: 34 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 5.0 years
Commonness: 4/20
Statement of Opinion:
- We struggle with audit preparations every year; this could ease a bit of the yearly pressure.
- The job demands might decrease making phases like year-end less challenging.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 6 | 4 |
| Year 5 | 6 | 4 |
| Year 10 | 5 | 4 |
| Year 20 | 5 | 4 |
Securities Analyst (Boston, MA)
Age: 29 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 3.0 years
Commonness: 3/20
Statement of Opinion:
- In my role, less stringent audits could mean more time for analysis over paperwork.
- This might open up opportunities to develop professionally without compliance dominating.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 5 |
| Year 3 | 6 | 5 |
| Year 5 | 6 | 5 |
| Year 10 | 5 | 5 |
| Year 20 | 5 | 5 |
CEO of a broker-dealer (Dallas, TX)
Age: 55 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 5.0 years
Commonness: 4/20
Statement of Opinion:
- Anything that cuts unnecessary costs is welcome; this is a nice step.
- However, we need to ensure other areas do not become overly complex.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 8 | 6 |
| Year 5 | 8 | 6 |
| Year 10 | 7 | 6 |
| Year 20 | 7 | 6 |
Finance Director (Atlanta, GA)
Age: 42 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 6/20
Statement of Opinion:
- Relief from the usual audit stress is something I look forward to.
- This keeps us compliant yet less burdened with costly processes.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 7 | 5 |
| Year 10 | 6 | 5 |
| Year 20 | 6 | 5 |
Brokers Association Representative (Seattle, WA)
Age: 61 | Gender: male
Wellbeing Before Policy: 8
Duration of Impact: 2.0 years
Commonness: 2/20
Statement of Opinion:
- This bill aligns with our advocacy for reducing paperwork burden on small firms.
- Anticipate a positive shift in how resources are allocated.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 8 | 7 |
| Year 20 | 7 | 7 |
Audit Consultant (Miami, FL)
Age: 39 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 4.0 years
Commonness: 3/20
Statement of Opinion:
- Interestingly, this might mean fewer clients due to reduced need for audits.
- However, it should ultimately lead to more strategic business opportunities.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 5 |
| Year 2 | 5 | 5 |
| Year 3 | 5 | 5 |
| Year 5 | 5 | 5 |
| Year 10 | 5 | 5 |
| Year 20 | 5 | 5 |
Regulatory Affairs Specialist (Denver, CO)
Age: 31 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 3.0 years
Commonness: 4/20
Statement of Opinion:
- While it's too soon to see all implications, reducing audits is promising but we need safeguards.
- I see a chance to allocate energies in more impactful areas.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 6 |
| Year 3 | 6 | 5 |
| Year 5 | 6 | 5 |
| Year 10 | 6 | 5 |
| Year 20 | 6 | 5 |
HR Manager (Houston, TX)
Age: 48 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 5/20
Statement of Opinion:
- Our workforce could benefit from less stress connected to audits, potentially aiding retention.
- Regulatory changes are well-needed. Let's hope it drives job satisfaction.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 5 |
| Year 5 | 7 | 5 |
| Year 10 | 7 | 5 |
| Year 20 | 6 | 5 |
Cost Estimates
Year 1: $0 (Low: $0, High: $10000000)
Year 2: $0 (Low: $0, High: $10000000)
Year 3: $0 (Low: $0, High: $10000000)
Year 5: $0 (Low: $0, High: $10000000)
Year 10: $0 (Low: $0, High: $10000000)
Year 100: $0 (Low: $0, High: $10000000)
Key Considerations
- The complexity reduction in financial reporting due to audit exempt status.
- Potential minor impacts on the integrity of financial reporting standards for exempt firms.
- Efficient allocation of regulatory resources towards higher-risk firms.