July 10, 1995
TO: ACCOUNTING/TREASURERS COMMITTEE No. 27-95
OPERATIONS COMMITTEE No. 23-95
TRANSFER AGENT ADVISORY COMMITTEE No. 40-95
RE: ACCOUNTANT'S REPORT ON TRANSFER AGENT INTERNAL CONTROLS
______________________________________________________________________________
Rule 17Ad-13 of the Securities Exchange Act of 1934 requires every transfer agent to file
annually a report prepared by an independent accountant concerning the transfer agentGs system of
internal accounting control and related procedures for the transfer of record ownership and the
safeguarding of related securities and funds.
Recently, Statement on Standards for Attestation Engagements No. 2, Reporting on an EntityGs
Internal Control Structure Over Financial Reporting, superseded Statement on Auditing Standards No. 30,
Reporting on Internal Accounting Control. Rule 17Ad-13 reports on the internal control structure of transfer
agents were previously issued under SAS No. 30. However, accountants are now required to issue these
reports under SSAE No. 2. This change caused independent accountants to change the wording of
internal control reports. The SEC staff has objected to the revised language and has been rejecting
reports filed in the new format.
The AICPA developed a modified form of report and filed a “no action” request with the SEC
seeking confirmation that the modified form of report is in compliance with Rule 17Ad-13. Attached is
the SEC response to the AICPA confirming that the revised form of report is in compliance with Rule
17Ad-13. Also attached is a model revised form of report.
Those reports that were previously filed with the SEC and rejected should be refiled under the
new format as of the original audit and report date. The report should include a cover letter explaining
the following:
` the original report was filed on a timely basis,
` the report was rejected by the SEC because the form of the report was not acceptable to the SEC,
` the form of the refiled report is consistent with the April 7, 1995 “no action” letter on reports on the
internal control structure of transfer agents; and,
` indicate that the transfer agentGs internal control review continues to be on the same audit cycle.
Gregory M. Smith
Director - Operations/
Compliance & Fund Accounting
Attachment