Surprise! What You May Not Know About the SEC's Custody Rule:  Jim Kaiser Authors Article For the Investment Adviser Association Newsletter

Posted by James Kaiser on Aug 13, 2018 6:27:00 PM

Investment advisers deemed to have custody of client funds or securities:  Is your accounting firm both registered with, and subject to regular inspection by, the Public Company Accounting Oversight Board?  In certain situations, it's an important question.  Jim Kaiser explores this and other questions about the SEC's Custody Rule in a recent issue of the Investment Adviser Association newsletter.

Amendments to Rule 206(4)-2 of the Investment Advisers Act of 1940, the Custody Rule, adopted in 2010, were designed to provide expanded safeguards for clients of investment advisers.  Among these amendments to the Custody Rule is a provision that requires advisers to undergo annual surprise examinations when they are deemed to have custody of client funds or securities.


custodyruleandpcaobDespite many years of implementation, the amendments, including the surprise exam requirement, continue to raise questions and cause confusion for investment advisers.  Advisers also may not be aware of recent changes to the professional standards for accountants governing surprise examination engagements as a result of the American Institute of Certified Public Accountants’ (“AICPA”) adoption of Statement on Standards for Attestation Engagements No.18 (“SSAE 18”).

Read the article. 

Learn more about the Investment Adviser Association.

Do you have questions about these topics?  BBD is a resource for you.  Please feel free to contact Jim Kaiser.

Do you know that BBD provides surprise custody examinations and performance verification services for advisers?  For more information about how we can help you, please contact Jim Kaiser.

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