Internal controls over financial reporting
Internal controls over financial reporting sits at the center of regulatory scrutiny for U.S. financial and capital markets firms, with the U.S. Securities and Exchange Commission and the Public Company Accounting Oversight Board both pressing for tighter documentation, faster remediation timelines, and cleaner audit trails after a run of material weakness disclosures in 2023 and 2024. The Financial Industry Regulatory Authority adds a parallel layer for broker-dealers, particularly around supervisory control testing under Rule 3120. No quiet period is coming: both the SEC and PCAOB have open rulemaking and inspection priorities that directly touch how firms design, test, and certify controls.
Watch
- PCAOB AS 2201 inspection findings on IT general controls across broker-dealer audits
- SEC Staff Bulletin guidance on CEO/CFO certifications under Sarbanes-Oxley Section 302 and 906
- Material weakness disclosure trends in 10-K filings: remediation timelines drawing comment letters
- FINRA Rule 3120 supervisory control annual reporting cycle: Q1 deadline pressure for calendar-year firms
- PCAOB proposed amendments to AS 2101 scoping rules for multi-entity financial groups
Recent material activity in Financial & Capital Markets
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SEC proposes amendments to Exchange Act Rule 3b-16 expanding ATS definition to include DeFi protocols
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SEC enforcement action against crypto lending platform for unregistered securities offering
The Commission filed charges against a major crypto lending platform alleging the firm offered and sold crypto asset lending products that constituted unregistered securities. The complaint seeks disgorgement of $340M in…
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CFTC and SEC release joint statement on digital asset classification framework
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Federal Reserve announces enhanced supervisory expectations for banks with crypto asset exposure
The Board of Governors issued SR 26-4 establishing new supervisory expectations for state member banks engaging in crypto-related activities. Banks must now maintain dedicated risk management frameworks, capital reserves…
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SEC approves spot Ethereum ETF amendments allowing staking yield pass-through
The Commission approved amendments to existing spot Ethereum ETF registration statements permitting the pass-through of staking rewards to fund shareholders. The approval includes enhanced disclosure requirements and a 3…
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SEC Division of Examinations publishes 2026 priorities: crypto compliance tops the list
The SEC's examination division released its annual priorities letter placing crypto asset compliance, stablecoin reserves, and DeFi protocol governance as the top three examination focus areas for 2026. Registered invest…
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FINRA proposes new rules for broker-dealer crypto custody and customer protection
FINRA filed a proposed rule change establishing custody requirements for broker-dealers holding crypto assets on behalf of customers. The proposal requires segregated wallets, proof-of-reserves attestations, and $10M min…
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Federal Reserve Board publishes research paper on CBDC impact on commercial bank deposits
The Board published a staff research paper modeling the potential displacement of commercial bank deposits by a retail CBDC. The paper estimates 8-12% deposit migration in the first two years, with disproportionate impac…
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