FINRA Updates Annual Report Extension Request Policy

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The Financial Industry Regulatory Authority (FINRA) recently issued Regulatory Notice 25-19, announcing amendments to its Annual Reports Extension of Time Request Policy. The updated policy refines the information required when firms request an extension to file audited annual reports.

FINRA will phase in the revised policy over an interim period, allowing firms to submit extension requests for 2025 annual reports under either the new policy or the prior policy. This transition period provides flexibility as firms and audit teams align processes with updated regulatory expectations.

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Highlights of the updated policy

• Expanded firm-level representations. The firm’s principal financial officer (PFO) is now required to provide enhanced representations regarding regulatory compliance (including net capital and customer protection rules) and whether any material weaknesses, if applicable, or books-and-records problems exist.
• Clarified auditor responsibilities. While an auditor letter is still required, auditors are no longer expected to represent whether the firm is in compliance with Securities Exchange Act of 1934 (SEA) Rules 15c3-1 and 15c3-3, whether material weaknesses exist, and that an unqualified audit opinion would be issued. Instead, auditors must indicate whether they agree with the firm’s representations and disclose any known issues that could delay report issuance.
• Transition relief for 2025 filings. Firms may continue to follow the prior policy for 2025 annual report filings, providing time to adjust documentation and coordination practices.
• Streamlined and modernized process. FINRA updated the policy to reflect current audit practices and eliminated outdated interpretive guidance related to SEA Rule 17a-5(m)(1).

What does the updated extension request policy mean in practice?

• Firms should review the updated policy early to understand the enhanced representations now required from management.
  • Under the updated policy, extension requests likely will require a more formal, management-driven submission, including a written representation from the firm’s PFO addressing:
    • The firm’s current compliance status with SEA Rules 15c3-1 (net capital) and 15c3-3 (customer protection)
    • Whether the firm has identified material weaknesses or books-and-records issues contributing to the filing delay
    • The specific reasons an extension is being requested and the expected timing for completion of the audit and filing
• Audit teams might need earlier and more structured coordination with firm leadership, given FINRA’s existing three-business-day submission requirement and the need to align management representations with auditor input at the time of submission.
• Firms should assess whether year-end timelines, governance, and escalation protocols remain appropriate under the revised framework.
• Using the 2025 transition year proactively can help reduce execution risk in future filing cycles once the updated policy is fully embedded.

Crowe observation: The updated policy reflects FINRA’s continued emphasis on management accountability and transparency in the financial reporting process. By shifting certain representations from auditors to firm leadership, FINRA is reinforcing the principle that responsibility for regulatory compliance and financial reporting rests squarely with management. Firms that proactively align their internal governance, documentation, and audit coordination practices with these expectations will be better positioned to navigate both routine filings and unexpected reporting challenges.

How should firms approach the updated policy?

Firms should consider preparing a standardized extension request package in advance of year-end that includes a draft PFO representation, supporting regulatory compliance calculations, and a documented timeline for audit completion. Doing so can facilitate timely coordination with auditors and might reduce execution risk if an extension request becomes necessary.