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Question 1

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What is the primary purpose of FOCUS Report Part I?

To report customer complaints to FINRA

To provide monthly unaudited financial and operational information to regulators

To disclose executive compensation to shareholders

To file annual audited financial statements

to track

2026 Statistics

Key Facts: Series 28 Exam

50-60%

First-Time Pass Rate

Industry estimate

69%

Passing Score

66/95 questions

60-80 hrs

Study Time

Recommended

33%

Net Capital

Largest section

$195

Exam Fee

FINRA

2 hours

Exam Duration

FINRA

The Series 28 exam has an estimated 50-60% first-time pass rate. It requires 69% (66/95 questions) to pass in 2 hours. The exam covers four major areas: Financial Reporting (17%), Operations/Recordkeeping (32%), Net Capital Requirements (33%), and Customer Protection/Cash Management (19%). No prerequisites required. Plan for 60-80 hours of study focusing on net capital calculations.

Sample Series 28 Practice Questions

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1What is the primary purpose of FOCUS Report Part I?

A.To report customer complaints to FINRA

B.To provide monthly unaudited financial and operational information to regulators

C.To disclose executive compensation to shareholders

D.To file annual audited financial statements

Explanation: FOCUS Report Part I is a monthly unaudited financial and operational report that broker-dealers must file with regulators. It provides a snapshot of the firm's financial condition, including net capital, aggregate indebtedness, and customer protection reserve calculations. This report allows regulators to monitor the firm's financial health between annual audits.

2An introducing broker-dealer must file FOCUS Report Part I with which regulatory body?

A.Only with the SEC

B.With the SEC and the designated examining authority (DEA)

C.Only with FINRA if it is the DEA

D.Only with the state securities regulator

Explanation: An introducing broker-dealer must file FOCUS Report Part I with both the Securities and Exchange Commission (SEC) and its designated examining authority (DEA). For most introducing broker-dealers, FINRA serves as the DEA. These filings are due within 17 business days after the end of each month.

3Under SEC Rule 17a-5, how long does an introducing broker-dealer have to file its annual audited financial statements?

A.30 days after the fiscal year end

B.60 days after the fiscal year end

C.90 days after the fiscal year end

D.120 days after the fiscal year end

Explanation: Under SEC Rule 17a-5, an introducing broker-dealer must file its annual audited financial statements within 60 days after the fiscal year end. These statements must be prepared in accordance with generally accepted accounting principles (GAAP) and audited by an independent public accountant registered with the Public Company Accounting Oversight Board (PCAOB).

4Which accounting principle requires that liabilities be recorded when they are incurred, regardless of when payment is made?

A.Cash basis accounting

B.Accrual basis accounting

C.Modified cash basis accounting

D.Tax basis accounting

Explanation: Accrual basis accounting requires that revenues be recognized when earned and expenses (liabilities) be recorded when incurred, regardless of when cash is received or paid. This provides a more accurate picture of a firm's financial position than cash basis accounting. Broker-dealers must maintain books and records on an accrual basis in accordance with GAAP.

5A FINOP is reviewing the balance sheet and notices that marketable securities are recorded at their original purchase price of $500,000, but their current market value is $450,000. Under GAAP, what adjustment is required?

A.No adjustment is required; securities are always recorded at historical cost

B.Write down to market value if the decline is other than temporary

C.Automatically mark to market regardless of the nature of the decline

D.Record at the higher of cost or market

Explanation: Under GAAP, marketable securities must be evaluated for impairment. If the decline in value is determined to be other than temporary (OTTI), the security must be written down to its fair market value with the loss recognized in earnings. For temporary declines, different rules may apply depending on the classification of the security (trading, available-for-sale, or held-to-maturity).

6What information is NOT typically included in FOCUS Report Part I?

A.Net capital computation

B.Customer reserve formula calculation

C.Detailed list of individual customer account balances

D.Aggregate indebtedness calculation

Explanation: FOCUS Report Part I includes summary financial information such as net capital computations, aggregate indebtedness calculations, and customer reserve formula summaries. It does not include detailed lists of individual customer account balances, which would be found in the firm's internal books and records, not the regulatory filing.

7An introducing broker-dealer discovers a material accounting error in previously filed FOCUS reports. What is the firm's obligation?

A.Wait until the next annual audit to correct it

B.File amended reports promptly and notify the DEA

C.Only correct it if the SEC specifically requests

D.Disclose it in the next quarterly report only

Explanation: When a broker-dealer discovers a material accounting error in previously filed reports, it must file amended reports promptly and notify its designated examining authority (DEA). Material errors can affect net capital calculations, reserve formula computations, and other regulatory requirements, so prompt correction is essential to maintain compliance.

8Under SEC Rule 17a-5, which of the following must be included in the annual audited financial statements of an introducing broker-dealer?

A.Only the balance sheet

B.Balance sheet, income statement, statement of changes in stockholders' equity, and statement of cash flows

C.Only the balance sheet and income statement

D.Only the statement of cash flows

Explanation: SEC Rule 17a-5 requires that annual audited financial statements include a complete set of financial statements: the balance sheet, income statement, statement of changes in stockholders' equity (or statement of changes in net worth for sole proprietorships), and statement of cash flows. These statements provide a comprehensive view of the firm's financial position and results of operations.

9Under SEC Rule 17a-3, how long must an introducing broker-dealer preserve its general ledgers?

A.3 years

B.6 years

C.7 years

D.Permanently

Explanation: Under SEC Rule 17a-3, general ledgers must be preserved for 6 years. The general ledger is the central accounting record that tracks all financial transactions and serves as the foundation for the firm's financial statements and regulatory reports. This 6-year retention period ensures that regulators can review historical financial information during examinations.

10Under SEC Rule 17a-4, records that are required to be maintained for 3 years must be preserved in an easily accessible place for at least how long?

A.The entire 3-year period

B.The first 2 years

C.The first year

D.The last 2 years

Explanation: Under SEC Rule 17a-4, records that must be preserved for 3 years must be kept in an easily accessible place for the first 2 years. After 2 years, they may be moved to a less accessible location (such as off-site storage) for the remaining retention period, provided they can still be retrieved within a reasonable time if requested by regulators.

About the Series 28 Exam

The Series 28 qualifies principals to supervise the financial and operations functions of an introducing broker-dealer that does not carry customer accounts or hold customer funds/securities. It covers financial reporting, operations and recordkeeping, net capital requirements, and customer protection.

Questions

95 scored questions

Time Limit

2 hours

Passing Score

69%

Exam Fee

$195 (FINRA)

Series 28 Exam Content Outline

17%

Financial Reporting

GAAP accounting, FOCUS reports, audited financial statements, and SEC financial reporting requirements

32%

Operations, Regulations, and Preservation of Books and Records

SEC Rules 17a-3 and 17a-4, general ledger operations, recordkeeping, back-office functions, FINRA rules, and SIPA

33%

Net Capital Requirements

SEC Rule 15c3-1, net capital computation, haircuts, subordinated debt, and early warning notifications

19%

Customer Protection, Funding and Cash Management

SEC Rule 15c3-3, reserve formula, possession and control, custody requirements, and cash management

How to Pass the Series 28 Exam

What You Need to Know

Passing score: 69%
Exam length: 95 questions
Time limit: 2 hours
Exam fee: $195

Keys to Passing

Complete 500+ practice questions
Score 80%+ consistently before scheduling
Focus on highest-weighted sections
Use our AI tutor for tough concepts

Series 28 Study Tips from Top Performers

1Master SEC Rule 15c3-1 - understand net capital computation, aggregate indebtedness, and minimum requirements for introducing firms

2Study SEC Rules 17a-3 and 17a-4 thoroughly - recordkeeping and retention requirements are 32% of the exam

3Practice haircut calculations for proprietary positions

4Understand FOCUS report structure and filing requirements for introducing broker-dealers

5Know the difference between tentative net capital, net capital, and excess net capital

6Study SIPA requirements and customer protection rules under SEC Rule 15c3-3

7Learn early warning notification thresholds and required actions

8Understand subordinated debt agreements and their impact on net capital

Frequently Asked Questions

What is the Series 28 exam?

The Series 28 is FINRA's Introducing Broker-Dealer Financial and Operations Principal Qualification Examination. It qualifies individuals to act as Financial and Operations Principals (FINOPs) at introducing broker-dealers that do not carry customer accounts or hold customer funds/securities. The exam covers financial reporting, recordkeeping, net capital requirements, and customer protection.

What is the Series 28 pass rate?

The Series 28 exam has an estimated pass rate of 50-60% for first-time test-takers. The exam has 95 questions (85 scored + 10 unscored pretest) with a 69% passing score (66 correct answers), taken over 2 hours. The technical nature of net capital calculations and regulatory requirements contributes to the difficulty.

What are the prerequisites for the Series 28?

There are no formal prerequisites for taking the Series 28 exam. Unlike many other FINRA exams, you do not need to pass the SIE first. However, an accounting or finance background is strongly recommended given the technical financial content. To become registered, you must be associated with a FINRA member firm.

How long should I study for Series 28?

Plan for 60-80 hours of study over 6-10 weeks. Focus on net capital requirements under SEC Rule 15c3-1 (33% of exam) and operations/recordkeeping under SEC Rules 17a-3 and 17a-4 (32% of exam). Practice net capital computations and haircut calculations extensively. Complete at least 200 practice questions and score 80%+ consistently before scheduling.

What is the difference between Series 27 and Series 28?

The Series 27 is for broker-dealers that carry customer accounts or hold customer funds/securities (clearing firms). The Series 28 is a shorter version for introducing firms that do not hold customer funds. The Series 27 has 145 questions over 3h 45m with a 69% passing score, while the Series 28 has 95 questions over 2 hours with a 69% passing score. Both cover similar topics but the Series 27 goes into more depth.

What are the main topics on the Series 28?

The main topics are: Net Capital Requirements (33%) covering SEC Rule 15c3-1 computations and haircuts; Operations and Recordkeeping (32%) covering SEC Rules 17a-3 and 17a-4; Customer Protection and Cash Management (19%) covering SEC Rule 15c3-3; and Financial Reporting (17%) covering GAAP, FOCUS reports, and audited financials.