Surprise Custody Audit

Be Prepared with Trusted and Fair Audits

On December 30, 2009, the SEC adopted amendments to the custody rule for investment adviser client fund or securities. These amendments were put in place to protect clients and add additional safeguards under the Advisers Act.

While their where a bevy of changes made, here are a few of the main takeaways Investment managers should be aware of regarding the amendments:

  • Custodians are required to send directly to the investor’s quarterly account statements, and the Investment Advisers have a responsibility to ensure this is happening.
  • Advisers that have custody of their clients assets are required annually to have complete a surprise custody audit by an independent public accounting firm, in order to verify the existence of client’s assets.
  • The fund’s financial statements are required to be audited by an independent, Public Company Accounting Oversight Board (PCAOB) certified accounting firm, if the adviser relies on delivering audited financial statements to pool investors in order to satisfy the custody rule.
  • Adviser must acquire a report of the internal controls from their custodian, ensuring the clients assets are being properly managed and protected from errors and fraud.

Contact Us Today

If you are an investment manager who has been entrusted with custody of your client’s financial assets, your fund is subject to an annual surprise examination (audit) by an independent public accounting firm. If you are looking for a public accounting firm who can be trusted to conduct a fair and thorough examination to provide the most confidence to you and your investors, then please reach out to us at 844-386-3829 to learn more about the services we offer.



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