Series 28 — Introducing Broker-Dealer FINOP Exam Blueprint

How to Use This Exam Blueprint

Use this checklist as a practical study map for the FINRA Series 28 — Introducing Broker-Dealer Financial and Operations Principal Qualification Examination. It is designed for candidates preparing for the real Series 28 exam who need to connect public topic areas to applied readiness.

Do not treat this as a promise of exact exam weighting or scoring. Instead, use it to ask:

• Can I classify the item correctly?
• Can I calculate the financial effect?
• Can I identify the required report, record, notice, or supervision issue?
• Can I distinguish an introducing broker-dealer issue from a carrying broker-dealer issue?
• Can I apply the rule logic in a short fact pattern without over-reading?

For any numeric thresholds, time frames, filing mechanics, or current rule text, verify against current FINRA and SEC materials used in your course of study.

High-level Series 28 readiness areas

Core “can you do this?” checklist

FINOP responsibility and regulatory judgment

Check yourself:

• I can explain the role of the financial and operations principal at an introducing broker-dealer.
• I can identify when a financial issue should be escalated before the firm continues business as usual.
• I can distinguish an accounting correction from a regulatory capital problem.
• I can recognize when inaccurate books and records may make a financial report unreliable.
• I can identify when a change in business activity may affect net capital, reporting, supervision, or clearing arrangements.
• I can determine when a proposed distribution, withdrawal, repayment, bonus, or transfer could weaken capital.
• I can identify when an outside accountant, clearing firm, supervisor, compliance officer, or regulator may need to be involved.
• I can choose the answer that documents, reconciles, and reports rather than hides, delays, or nets away a problem.

Introducing broker-dealer model

Be ready to answer questions like:

• What does the introducing firm still control or supervise?
• What is handled by the clearing firm?
• What happens if the introducing firm receives customer funds or securities?
• How do clearing statements affect the introducing firm’s books?
• How do customer complaints, trade errors, commissions, and fees flow through the introducing firm’s accounting records?
• Which records must be maintained by the introducing firm even if another party processes transactions?
• How can an operational exception at the clearing firm still create a financial or supervisory issue for the introducing firm?

Net capital computation logic

You should be able to work from financial accounting to regulatory capital logic.

At a readiness level, understand the structure:

[ \text{Tentative net capital} = \text{net worth}

• \text{allowable credits}

• \text{non-allowable assets}
• \text{required deductions} ]

[ \text{Net capital} = \text{tentative net capital}

• \text{securities haircuts}
• \text{operational charges}
• \text{other regulatory deductions} ]

[ \text{Excess net capital} = \text{net capital}

• \text{required minimum net capital} ]

You should be able to:

• Start with the correct net worth figure.
• Identify assets that may be non-allowable for regulatory capital purposes.
• Identify assets that require support before being treated as allowable.
• Apply the concept of haircuts to proprietary securities positions.
• Recognize that market movements can change net capital through securities valuation and haircuts.
• Identify operational charges, deficits, suspense items, aged items, and unsecured items that may reduce capital.
• Distinguish book capital from regulatory capital.
• Determine whether a firm has excess net capital, is close to a deficiency, or needs escalation.
• Understand why a profitable firm can still have a net capital issue if assets are illiquid, unsupported, or non-allowable.
• Understand why a cash contribution, subordinated borrowing, or receivable collection can improve capital only if properly documented and eligible.

Aggregate indebtedness logic

Know the conceptual relationship:

\[ \text{Aggregate indebtedness ratio} = \frac{\text{aggregate indebtedness}}{\text{net capital}} \]

Be ready to:

• Identify liabilities that generally increase aggregate indebtedness.
• Identify liabilities that may receive different treatment because of approved subordination, secured status, or regulatory classification.
• Avoid excluding liabilities merely because they are unpaid, estimated, disputed, or owed to an affiliate.
• Understand that increasing liabilities can affect both net worth and aggregate indebtedness analysis.
• Recognize that an omitted payable can overstate capital and understate indebtedness.
• Determine whether a new liability, lease, settlement, tax accrual, or bonus accrual changes the firm’s regulatory position.
• Explain why capital adequacy is not evaluated only by looking at the cash balance.

Accounting entries and classification

Financial reporting and records readiness

Reports and schedules you should be able to interpret

Books-and-records checks

You should be able to answer:

• What record should exist for this transaction?
• Who is responsible for creating, reviewing, or retaining it?
• Does the record agree with the general ledger?
• Does the record agree with the clearing firm statement?
• Does the record support the regulatory financial report?
• Is the record complete, timely, accurate, and accessible?
• Does a correction require documentation rather than silent overwriting?
• Does the item reveal a supervisory or control deficiency?

Customer protection and operational concepts

For Series 28, focus on the applied distinction between an introducing firm’s business model and the customer protection concepts that still matter.

Decision-point scenarios

Use these as final-review prompts. For each scenario, decide: classification, financial effect, record required, supervisory issue, and whether escalation is needed.

Scenario 1: Receivable from an affiliated company

Scenario 2: Customer check received by the introducing firm

Scenario 3: Proposed owner withdrawal

Scenario 4: Unrecorded legal settlement

Scenario 5: Proprietary securities decline in value

Scenario 6: Clearing firm receivable does not reconcile

Scenario 7: Expense paid by parent company

Calculation and interpretation checks

Net capital workflow

Use this workflow when practicing calculations:

1. Start with the balance sheet.
2. Confirm all liabilities are recorded.
3. Adjust net worth for regulatory capital treatment.
4. Deduct non-allowable assets.
5. Apply securities haircuts and other required deductions.
6. Compare net capital to the applicable requirement.
7. Determine excess or deficiency.
8. Identify any required escalation, restriction, correction, or reporting action.

    flowchart TD
	    A[Start with trial balance] --> B[Confirm assets and liabilities]
	    B --> C[Adjust net worth]
	    C --> D[Deduct non-allowable assets]
	    D --> E[Apply haircuts and other charges]
	    E --> F[Compute net capital]
	    F --> G[Compare to required minimum]
	    G --> H{Adequate capital?}
	    H -->|Yes| I[Document and monitor]
	    H -->|No or close| J[Escalate, correct, and evaluate reporting]

Common calculation tasks

Interpretation prompts

After every calculation, ask:

• Did the answer improve or weaken capital?
• Did aggregate indebtedness change?
• Did the item affect both the balance sheet and a regulatory deduction?
• Did I treat a receivable as allowable without checking support?
• Did I record the liability before testing capital?
• Did I consider whether a notice, filing amendment, or escalation is required?
• Did I assume an accounting asset is automatically a regulatory capital asset?
• Did I identify the business activity driving the capital requirement?

Topic-by-topic detailed checklist

1. Regulatory framework and FINOP function

Review:

• FINRA’s role as the exam provider and regulator for member firm activities.
• SEC broker-dealer financial responsibility concepts.
• Responsibilities of a financial and operations principal.
• Relationship among financial reporting, net capital, books and records, and supervision.
• When the FINOP should challenge incomplete information.
• When a firm should escalate a capital, reporting, or books-and-records issue.
• Why accurate records matter even when the dollar amount seems small.
• The difference between routine accounting entries and regulatory financial responsibility issues.

Can you do this?

• Identify the principal most directly responsible for financial operations.
• Choose the response that preserves accurate books and records.
• Recognize when a firm should not wait until month-end to address a capital issue.
• Explain why regulatory filings must be supported by reconciled books.

2. Broker-dealer business activities and capital impact

Review the capital effect of:

• Introducing customer accounts.
• Receiving commissions or concessions.
• Charging advisory, service, platform, or account fees.
• Maintaining proprietary securities positions.
• Holding deposits with a clearing firm.
• Using affiliates or shared services.
• Entering expense-sharing arrangements.
• Paying branch, representative, or employee compensation.
• Correcting trade errors.
• Expanding into a new line of business.

Exam cue: if the business activity changes, the financial responsibility analysis may also change.

3. Net capital assets

Be able to classify:

• Cash.
• Bank deposits.
• Restricted cash.
• Clearing deposits.
• Receivables from clearing firms.
• Receivables from customers.
• Receivables from broker-dealers.
• Receivables from employees.
• Receivables from owners or affiliates.
• Prepaid expenses.
• Fixed assets.
• Exchange memberships or deposits.
• Proprietary securities.
• Fails to deliver.
• Suspense items.
• Error account balances.

For each asset, ask:

4. Liabilities, accruals, and aggregate indebtedness

Review:

• Accounts payable.
• Commissions payable.
• Clearing charges payable.
• Accrued payroll and bonuses.
• Rent and occupancy expenses.
• Technology and vendor expenses.
• Professional fees.
• Taxes payable.
• Litigation and settlement accruals.
• Customer-related payables.
• Payables to affiliates.
• Ordinary bank debt.
• Approved subordinated borrowings.
• Unapproved or informal loans.
• Contingent liabilities and guarantees.

Can you do this?

• Identify omitted liabilities from a fact pattern.
• Explain how recording a liability can reduce net worth.
• Determine whether a payable should be included in aggregate indebtedness.
• Distinguish approved subordinated capital from ordinary debt.
• Recognize that disputed liabilities may still require evaluation.
• Identify when netting assets and liabilities is improper without support.

5. Subordination, capital contributions, and withdrawals

Review:

• Purpose of subordinated borrowings in regulatory capital.
• Difference between equity, ordinary debt, and approved subordination.
• Documentation and approval concepts for subordinated capital.
• Capital contribution accounting.
• Owner withdrawals and distributions.
• Repayment or prepayment concerns.
• Impact on excess net capital.
• Notices or approvals that may be implicated by capital changes.

Decision prompt:

6. Financial statements and reporting consistency

Review how these connect:

• Balance sheet.
• Income statement.
• Statement of changes in ownership equity.
• Statement of cash flows, where relevant.
• Trial balance.
• Net capital computation.
• Aggregate indebtedness schedule.
• Supporting schedules.
• Regulatory financial filings.
• Auditor or accountant workpapers.
• Management certifications or sign-offs.

Can you do this?

• Trace a balance sheet item to a ledger and support schedule.
• Explain why an unreconciled schedule undermines a filing.
• Identify when an amended or corrected report may be needed.
• Determine whether a loss, liability, or capital withdrawal affects a filed report.
• Recognize inconsistent treatment of the same item across schedules.

7. Revenue, commissions, and expenses

Review:

• Commission revenue recognition.
• Commission receivables from clearing firms or product sponsors.
• Representative payout accruals.
• Chargebacks and reversals.
• Fees billed to customers.
• Clearing charges.
• Referral or service fees.
• Expense-sharing agreements.
• Branch expenses.
• Unrecorded or prepaid expenses.
• Revenue cut-off around reporting dates.

Exam traps:

• Recording gross revenue but omitting payout liability.
• Treating unpaid expenses as irrelevant.
• Failing to accrue known clearing charges.
• Treating a parent-company payment as automatically outside the broker-dealer.
• Ignoring chargebacks or reversals that affect receivables.
• Recognizing revenue without support from clearing or product sponsor records.

8. Operations, settlement, and clearing activity

Review:

• Trade date versus settlement date accounting.
• Clearing firm statements.
• Fails to deliver and fails to receive.
• DKs and uncompared trades.
• Suspense accounts.
• Error accounts.
• Stock record concepts.
• Customer confirmations and statements.
• Trade corrections and cancels.
• Operational breaks and aged items.
• Cash and securities movements.

Can you do this?

• Follow a trade from order to clearing statement to ledger.
• Identify when a fail or break creates a capital or supervisory issue.
• Distinguish customer activity from firm proprietary activity.
• Recognize unresolved suspense items as red flags.
• Determine whether an error loss should be recognized.
• Identify when a customer has been affected by an operational error.

9. Books, records, and retention concepts

Review the purpose of:

• General ledger.
• Cash receipts and disbursements blotters.
• Securities blotters.
• Customer account records.
• Order tickets or order records.
• Trade confirmations.
• Customer statements.
• Bank statements and reconciliations.
• Trial balances.
• Financial statements.
• Net capital workpapers.
• Written agreements.
• Supervisory review evidence.
• Complaint and error records.
• Correspondence and communications records, where relevant.

Readiness questions:

• What record proves the transaction happened?
• What record proves it was authorized?
• What record proves the amount is correct?
• What record proves the item was reviewed?
• What record supports the regulatory filing?
• What record would an examiner ask for?
• What breaks if the record is missing?

10. Internal controls and supervision

Review controls over:

• Bank reconciliations.
• Clearing statement reconciliations.
• Receivable aging.
• Payable accruals.
• Capital computations.
• Owner withdrawals.
• Subordinated borrowing records.
• Expense allocations.
• Trade errors.
• Suspense accounts.
• Regulatory filings.
• Financial report review.
• Books-and-records retention.
• Access to accounting systems.
• Segregation of duties.

A control is exam-ready when you can identify:

Common weak areas and traps

Scenario judgment checklist

When you see a Series 28 fact pattern, quickly label the issue.

Final-week checklist

Knowledge cleanup

• I know the major Series 28 readiness areas without looking at notes.
• I can explain the difference between book capital and regulatory net capital.
• I can classify common assets as allowable, non-allowable, or requiring further analysis.
• I can identify liabilities that affect aggregate indebtedness.
• I can explain how introducing and clearing firm responsibilities interact.
• I can describe why accurate books and records support financial filings.
• I can identify the likely control failure in an operational scenario.
• I have reviewed current study materials for any specific thresholds, time frames, forms, or notices.

Calculation practice

• I can complete a net capital computation from a simplified balance sheet.
• I can adjust for non-allowable assets.
• I can identify haircut-related issues for proprietary securities.
• I can compute excess net capital conceptually and interpret the result.
• I can evaluate the effect of a proposed withdrawal, contribution, loan, or loss.
• I can identify how an omitted liability changes both financial statements and regulatory capital.
• I can spot when a calculation answer is directionally wrong.

Scenario practice

• I can answer short fact patterns without assuming facts not given.
• I can identify whether the issue is accounting, capital, operations, records, supervision, or reporting.
• I can choose the most conservative supportable regulatory answer when records are incomplete.
• I can explain why the wrong answers are wrong.
• I can separate customer protection concepts from general customer service issues.
• I can spot related-party, aged, unsupported, or restricted items quickly.

Exam execution

• I read the final sentence of each question first when the fact pattern is long.
• I identify whether the question asks for the best action, correct classification, calculation result, or regulatory consequence.
• I avoid choosing an answer based only on ordinary accounting treatment.
• I do not ignore words such as “unsecured,” “aged,” “affiliate,” “unreconciled,” “proposed,” or “after the transaction.”
• I mark calculation questions where one assumption controls the answer.
• I review missed practice questions by topic, not just by score.

Practical next step

After reviewing this Exam Blueprint, build a short error log with five columns: topic, missed fact, rule concept, correct reasoning, retest date. Then practice mixed Series 28 questions that force you to classify items, compute capital effects, and choose the proper supervisory or reporting response.