FOCUS Report Mbsc Securities Corporation

X-17A-5 [Paper] - FOCUS Report

Published: 2007-04-03 11:34:07
Submitted: 2007-03-01
Period Ending In: 2006-12-31
scanned.pdf Scanned paper document


ANNUAL AUDITED REPORT
                                                   id ===_ ho *
                                                             01700608                                         SEC FILE NUMBER
                                                                    .     —. _.~v.c and Dealers
           4                               Pursuant to Section 17 of the Securities Exchange Act of 1934          8— 13801
                                                             and Rule 17a—5 Thereunder


REPORT FOR THE PERIOD BEGINNING                          01/01/06             AND ENDING                             123106
                                                         MM/DD/YY                                                   MM/DDYY


                                                 A. REGISTRANT IDENTIFICATION
NAME OF BROKER—DEALER:

               Dreyfus Service Corporation

                                                                                       o_
ADDRESS OF PRINCIPAL PLACE OF BUSINESS:                                                SECuRITE
(Do not use P.O. Box No.)                                                                        S g‘éggfi\’},gBOMMISS!ON

                    200 Park Avenue
                                                                                              MAR       ; 2 QN7
                                             e                          (No. and StreetBRAN

                         New York                                       New Yorkq5
                                                                                              CH OFRE€!STRATION3
                                                                                              EXAMINAUQNS              10166
                              (City)                                        (State)                                   Zip Code)

NAME AND TELEPHONE NUMEBER OF PERSON TO CONTACT IN REGARD TO THIS REPORT

                                                                                              (Area Code —— Telephone No.)
William H. Verity III                                                                                      212.922.7892
                                                  B. ACCOUNTANT IDENTIFICATION
INDEPENDENT PUBLIC ACCOUNTANT whose opinion is contained in this Report*
(Name —— ifindividual, state last, first, middle name)
                                                                                                      PR@@ESSED
KPMG LLP

345 Park Avenue                                             New York, New York                       ;      APR 1 1 200710154

(ADDRESS)        Number and Street                              City                     State                THOVMSON Zip Code
                                                                                                              FINANCIAL
CHECK ONE:
                          X    Certified Public Accountant
                               Public Accountant
                               Accountant not resident in United States or any of its possessions.

                                                     FOR OFFICAL USE ONLY




 *Claims for exemption from the requirement that the annual report be covered by the opinion of an independent public account.
 supported by a statement offacts and circumstances relied on as the basis for the exemption. See section 240.17a—5(e)(2).




                                                                                      NC


                                                                                                                             O
                                                                               13.


                                                          OATH OR AFFIRMATION




                                                                                                                             44
             I, Gary Pierce, swear (or affirm) that, to the best of my knowledge and belief the accompanying
             financial statements and supporting schedules pertaining to the firm of Dreyfus Service Corporation
             as of December 31, 2006, are true and correct. I further swear (or affirm) that neither the company nor
             any partner, proprietor, principal officer or director has any proprietary interest in any account




                                                                                                                             &
             classified solely as that of a customer [EXCEPT AS FOLLOWS:].



                                                                                 eA—




                                                                                                                             t
                                                                               *l              Signature




                                                                                                                             6
                                                                   Title Chief Financial Officer

                                         A
                             fiKA_a,u,a(\/ L‘/l




                                                                                                                             t
                                                                 NmnanARPnglR gRASlLOVSKY
                                                                     ry    Public,   State of Ne
            VYoX.
            Notary Pul')lic/
                                                S                         No.: OikR2ignens " (°*
                                  T                   I            Qualified in Queens County
                                                               Certificate Filed in New York County
                                                                 Commission Expires August 31, 1994


                                           This report ** contains (check all applicable boxes):

                   (a)     Facing Page
100 A A HHHHHHFr




                   (b)     Statement of Financial Condition
                   (c)     Statement of Income (loss).
                   (d)     Statement of Cash Flows
                   (e)     Statement of Changes in Stockholder‘s Equity
                   (f)     Statement of Changes in Liabilities Subordinated to Claims of Creditors
                   (g)     Computation of Net Capital
                   (h)     Computation for Determination of Reserve Requirement Pursuant to Rule 15¢3—3 or a
                            statement concerning exemption.
                    (i)    Information Relating to the Possession or Control Requirements Under Rule 15c3—3 or a
                           statement that none Is required.
                    (§)    A Reconciliation, including appropriate explanation, of the computation of Net Capital
                           Under Rule 15¢3—1 and the Computation for Determination of the Reserve Requirements
                          Under Exhibit A of Rule 15c3—3.
                   (k)      Schedule of Segregation Requirements and Funds in Segregation Pursuant to
                           Commodity Exchange Act
                   (1)     A Reconciliation between the audited and unaudited Statements of Financial
                           Condition with respect to methods of consolidation
                   (m)     An Oath or Affirmation
                   (n)     A Copy of the SIPC Supplemental Report
                   (0)     A Report describing any material inadequacies found to exist or found to have
                           existed since the date of the previous audit
        [X] (p)            Independent auditor‘s report on internal control,



               ** For conditions of confidential treatment of certain portions of this filing, see section 240.17a—5(e)(3)


o


                              Dreyfus Service Corporation and Subsidiary Companies
                               (A wholly owned subsidiary of The Dreyfus Corporation)

                                                  Table of Contents
@
i




                                                                                        Page

      Independent Auditors® Report
a




      Consolidated Financial Statements:
        Consolidated Statement of Financial Condition




                                                                                         s1 O w m t ho
a




        Consolidated Statement of Operations
        Consolidated Statement of Changes in Stockholder‘s Equity
        Consolidated Statement of Changes in Subordinated Debt
a@—




        Consolidated Statement of Cash Flows
        Notes to Consolidated Financial Statements
9




      Schedule I — Computation of Net Capital under Rule 15c3—1 of the Securities
       and Exchange Commission                                                           17

      Schedule II — Statement Regarding Rule 15¢3—3 of the Securities and Exchange
&




         Commission                                                                      18

      Supplementary Independent Auditors‘ Report:
         Independent Auditors® Report on Internal Control
            Required by SEC Rule 17a—5                                                   19


                                   KPMG LLP
                                   345 Park Avenue
                                   New York, NY 10154




                                          Independent Auditors‘ Report


Stockholder and Board of Directors
Dreyfus Service Corporation:

We have audited the accompanying consolidated statement of financial condition of Dreyfus Service
Corporation and Subsidiaries (the Company) (a wholly owned subsidiary of The Dreyfus Corporation) as of
December 31, 2006, and the related consolidated statements of operations, changes in stockholders‘ equity,
changes in subordinated debt, and cash flows for the year then ended that you are filing pursuant to rule 17a—
5 under the Securities Exchange Act of 1934. These consolidated financial statements are the responsibility
of the Company‘s management. Our responsibility is to express an opinion on these consolidated financial
statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States of
America. Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit includes consideration of
internal control over financial reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company‘s
internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis
for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects,
the financial position of Dreyfus Service Corporation and Subsidiaries as of December 31, 2006, and the
results of their operations and their cash flows for the year then ended in conformity with accounting
principles generally accepted in the United States of America.

Our audit was conducted for the purpose of forming an opinion on the basic financial statements taken as a
whole. The information contained in Schedules I and !I is presented for purposes of additional analysis and is
not a required part of the basic financial statements, but is supplementary information required by rule 17a—5
under the Securities Exchange Act of 1934. Such information has been subjected to the auditing procedures
applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.



                                                     KPMCG LLP
February 27, 2007




                                   KPMG LLP, a U.S, limited liabiity partnershi, is the U.$
                                   member firm of KPMG International, a Swiss cooperative


                  DREYFUS SERVICE CORPORATION AND SUBSIDIARY COMPANIES
                              (A wholly owned subsidiary of The Dreyfus Corporation)
                                     Consolidated Statement of Financial Condition
                                                  December 31, 2006
                                                     (In thousands)


                                                        Assets

Cash and cash equivalents — note 1(c)                                                  $       67,038
Trading securities — at fair value — note 1(d)                                                    622
Secured demand note — note 3                                                                  170,000
Receivables:
   From related investment companies and affiliates — notes 6 and 10(a)                        22,418
   Other                                                                                        9,589
               Total receivables                                                               32,007
Investment in leveraged leases —— note 8                                                       57,260
Fixed assets, at cost, less accumulated depreciation and amortization —— note 4                 9,135
Deferred sales commissions — note 5                                                             8,124
Other assets                                                                                    3,097
               Total assets                                                            $     347,283
                                         Liabilities and Stockholder‘s Equity
Liabilities:
Deferred income taxes, net — note 6                                                    $       5.887
Interest payable — note 3                                                                      2,569
Due to affiliates — note 10 (d)                                                               32,948
Other liabilities and accrued expenses                                                        48,520
               Total liabilities                                                               89,924
Subordinated debt — note 3                                                                    170,000
Stockholder‘s equity
Common stock, no par value. Authorized, issued, and outstanding 200 shares
Additional paid—in capital                                                                  1,418,583
Accumulated deficit                                                                        (1,331,224)
               Total stockholder‘s equity                                                     87,359
Commitments and other matters — notes 7, 8, 9, 11, and 12
               Total liabilities and stockholder‘s equity                              $     347,283


See accompanying notes to consolidated financial statements.


                                 KPMG LLP
                                 345 Park Avenue
                                 New York, NY 10154



                                      Independent Auditors‘ Report on
                              Internal Control Required by SEC Rule 17a—5



Stockholder and Board of Directors
Dreyfus Service Corporation:

In planning and performing our audit of the consolidated financial statements of Dreyfus Service
Corporation and Subsidiaries (the Company), as of and for the year ended December 31, 2006,                in
accordance with auditing standards generally accepted in the United States of America, we considered the
Company‘s internal control over financial reporting (internal control) as a basis for designing our auditing
procedures for the purpose of expressing an opinion on the consolidated financial statements, but not for
the purpose of expressing an opinion on the effectiveness of the Company‘s internal control. Accordingly,
we do not express an opinion on the operating effectiveness ofthe Company‘s internal control.

Also, as required by rule 17a—5(g)(1) of the Securities and Exchange Commission (SEC), we have made a
study of the practices and procedures followed by the Company including consideration of control activities
for safeguarding securities. This study included tests of such practices and procedures that we considered
relevant to the objectives stated in rule 17a—5(g) in making the periodic computations of aggregate debits
and net capital under rule 17a—3(a)(11) and for determining compliance with the exemptive provisions of
rule 15¢3—3. Because the Company does not carry securities accounts for customers or perform custodial
functions relating to customer securities, we did not review the practices and procedures followed by the
Company in any of the following:

1.      Making quarterly securities examinations, counts, verifications, and comparisons and recordation of
        differences required by rule 17a—13

2.      Complying with the requirements for prompt payment for securities under Section 8 of Federal
        Reserve Regulation T of the Board of Governors of the Federal Reserve System

The management of the Company is responsible for establishing and maintaining internal control and the
practices and procedures referred to in the preceding paragraph. In fulfilling this responsibility, estimates
and judgments by management are required to assess the expected benefits and related costs of controls and
of the practices and procedures referred to in the preceding paragraph and to assess whether those practices
and procedures can be expected to achieve the SEC‘s above—mentioned objectives. Two of the objectives of
internal control and the practices and procedures are to provide management with reasonable but not
absolute assurance that assets for which the Company has responsibility are safeguarded against loss from
unauthorized use or disposition and that transactions are executed in accordance with management‘s
authorization and recorded properly to permit the preparation of consolidated financial statements in
conformity with generally accepted accounting principles. Rule 17a—5(g) lists additional objectives ofthe
practices and procedures listed in the preceding paragraph.

Because of inherent limitations in internal control and the practices and procedures referred to above, error
or fraud may occur and not be detected. Also, projection of any evaluation of them to future periods is
subject to the risk that they may become inadequate because of changes in conditions or that the
effectiveness of their design and operation may deteriorate.

A control deficiency exists when the design or operation of a control does not allow management or
                                                            19


                                 XPMG LLP, a U.5, hited fabiity partnership, is the U.S
                                 member firm of KPMG International, a Swiss coopretive


employees, in the normal course of performing their assigned functions, to prevent or detect misstatements
on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies,
that adversely affects the entity‘s ability to initiate, authorize, record, process, or report financial data
reliability in accordance with generally accepted accounting principles such that there is more than a remote
likelihood that a misstatement of the entity‘s financial statements that is more than inconsequential will not
be prevented or detected by the entity‘s internal control.

A material weakness is a significant deficiency, or combination of significant deficiencies, that results in
more than a remote likelihood that a material misstatement of the financial statements will not be prevented
or detected by the entity‘s internal control.

Our consideration of internal control was for the limited purpose described in the first and second
paragraphs and would not necessarily identify all deficiencies in internal control that might be material
weaknesses. We did not identify any deficiencies in internal control and control activities for safeguarding
securities that we consider to be material weaknesses, as defined above.

We understand that practices and procedures that accomplish the objectives referred to in the second
paragraph of this report are considered by the SEC to be adequate for its purposes in accordance with the
Securities Exchange Act of 1934 and related regulations, and that practices and procedures that do not
accomplish such objectives in all material respects indicate a material inadequacy for such purposes, Based
on this understanding and on our study, we believe that the Company‘s practices and procedures were
adequate at December 31, 2006, to meet the SEC‘s objectives.

This report is intended solely for the information and use of the Board of Directors, management, the SEC,
the National Association of Securities Dealers, Inc. and other regulatory agencies that rely on rule 17a—5(g)
under the Securities Exchange Act of 1934 in their regulation of registered brokers and dealers, and is not
intended to be and should not be used by anyone other than these specified parties.




                                    KPMG LCP

February 27, 2007




                                                                                      END

                                                  20



Document Created: 2018-10-27 02:55:18
Document Modified: 2018-10-27 02:55:18
9999999997-07-016031.paper AUTO-GENERATED PAPER DOCUMENT


ENT> X-17A-5 1 9999999997-07-016031.paper AUTO-GENERATED PAPER DOCUMENT This document was generated as part of a paper submission. Please reference the Document Control Number 07006083 for access to the original document.
Additional Files
FileSequenceDescriptionTypeSize
9999999997-07-016031.txt   Complete submission text file   1804

© 2019 SEC.report
SEC CFR Title 17 of the Code of Federal Regulations.