Audits

1. When can I expect my first audit?
2. How frequently will NFA audit my firm?
3. How can I prepare for an NFA audit?
4. I'm the compliance officer for a new firm. Can I meet with NFA staff outside of an audit to see if we have everything in order?
5. Will NFA announce that it is coming to do an audit?
6. What will NFA review during an audit?
7. How long does an audit take to complete?

1. When can I expect my first audit?

Generally, NFA tries to visit a new Member firm within a year of the firm becoming active.

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When can I expect my first audit?

2. How frequently will NFA audit my firm?

NFA is required to audit FCMs and RFEDs on an annual basis if they hold customer funds. NFA conducts a risk-based analysis to determine which of its other Member firms to visit in any given period.  This analysis considers many different business factors, as well as information such as customer complaints or concerns that arise during NFA's review of a firm's disclosure document, financial statement or promotional material. Generally, NFA visits CPOs, CTAs and IBs every three to four years, but the frequency may vary depending on NFA's risk analysis.

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How frequently will NFA audit my firm?

3. How can I prepare for an NFA audit?

The best way to be prepared for an NFA audit is to have properly prepared and maintained books and records available for examination at all times. NFA's Self-Examination Questionnaire, which Members must complete annually, is a valuable source of information concerning a Member's regulatory responsibilities and internal procedures. Reviewing the checklist should alert you to potential problem areas and procedures that need to be revised or strengthened.

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How can I prepare for an NFA audit?

4. I'm the compliance officer for a new firm. Can I meet with NFA staff outside of an audit to see if we have everything in order?

You may contact NFA to request an educational visit.  An educational visit is voluntary, available at no cost, and usually occurs within six to nine months after NFA membership becomes effective. During the visit, NFA staff will review your firm's operations, suggest improvements in your compliance procedures, discuss your regulatory requirements and any areas of concern you might have, and provide you with an educational binder that includes several of our most frequently used resources. These visits give firms the opportunity to ask questions about their regulatory obligations, and they provide NFA staff with the opportunity to learn about a new Member's business so that a future audit will be more efficient.

If you are interested in an educational visit, contact NFA's Information Center at 800-621-3570 or information@nfa.futures.org.

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I'm the compliance officer for a new firm. Can I meet with NFA staff outside of an audit to see if we have everything in order?

5. Will NFA announce that it is coming to do an audit?

In most cases, a member of NFA's audit team will notify a Member by telephone of an upcoming audit.  When possible, NFA will provide this notice about two weeks before the visit. This announcement is intended to provide the Member and key personnel with the opportunity to adjust their calendars accordingly and gather all necessary documents. In order for NFA to effectively meet its obligations, NFA cannot announce audits in certain circumstances, including audits of FCMs and RFEDs who hold customer funds, firms with sales practice concerns, or firms with customer complaints.

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Will NFA announce that it is coming to do an audit?

6. What will NFA review during an audit?

NFA will potentially review all of your firm's procedures, books and records associated with your commodities business. This includes, but is not limited to, the following: 

• Corporate Records
• Anti-Money Laundering Policies and Practices
• Sales Practices
• Supervisory Procedures
• Account Opening Documents
• Order Tickets
• Bunched Order Allocations
• Margin Policies
• Promotional Material
• Disclosure Documents
• Performance Capsule Support
• Bank Records
• Trading Records
• Financial Statement Records

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What will NFA review during an audit?

7. How long does an audit take to complete?

The length of an audit depends on the scope of the firm's operations, the condition and complexity of the firm's records, the responsiveness of firm personnel to NFA requests, and the results of prior audits.  The time can vary greatly between Member firms. For example, fieldwork for a guaranteed IB with an average amount of business, minimal promotional material and no customer complaints can be completed in about two days, while fieldwork for an FCM or RFED can take about three weeks. Fieldwork for a CTA is generally about four days and for a CPO is about one week. When an audit is announced, the auditor can give you a better estimate of the time needed to complete the fieldwork at your firm.

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How long does an audit take to complete?