Compliance Program Assessment/Internal Inspection
An internal inspection /compliance assessment is a great starting point if you’re new to working with us or simply want to gain a better understanding of where your firm stands with regard to regulatory compliance. An experienced ComplianceWorks staff member will travel to your location(s) and conduct a thorough and precise inspection of your compliance program that meets the requirements for an annual inspection as stipulated by the 1940 Investment Advisers Act as amended. The inspection examines the key processes used in the administration of the compliance program by interviewing management and staff members and examining documents provided by you. While the inspection is not as detailed as a regulatory audit, it will bring to light areas of concern in your compliance program. Additional documents are examined in areas that appear to have a weakness to determine if the issue is “one-off” or if there is a systematic problem in the compliance program. The standard areas examined by our staff during the inspection include the following:
Physical Office – does the office present a professional environment; are there issues related to shared space with non-regulated entities; is there proper signage directing persons to the adviser’s office and in the lobby?
Personnel – are all required persons licensed; are U-4s up to date; do all licensed personnel and officers have written employment agreements; has the adviser designated all required personnel?
Previous Exams – has the adviser had a recent regulatory exam and if so have all deficiency items been addressed; has the adviser maintained a program of annual inspections and if so has the adviser addressed any issues noted?
Material Relationships – does the adviser have material relationships that require disclosure?
Disclosure Documents – are the adviser’s ADV Parts 1 and 2 and accompanying schedules accurate and up-to-date; have all the required schedules been prepared; have all products and their fees been disclosed; have all conflicts of interest been disclosed?
Client Files – are client files secure; if used, do all client files have current investment management agreements or subscription documentation; do client files contain all supporting documentation; is there correspondence in client files and if so has it been supervised?
Communication – does the adviser have adequate procedures to govern the review of correspondence (written and electronic), advertising and third party questionnaires?
Records of the Adviser – are all organizational records maintained; are Code of Ethics and fiduciary records maintained; as applicable, have custodial records been maintained; have all accounting and financial records been maintained?
Written Policy – has the adviser maintained its compliance manual, pricing policy and written procedures on personal trading, correspondence, advertising, business continuity and inside information?
Internal Controls – does the adviser have procedures affecting internal controls such as trade review and risk assessment?
Pooled Investment Vehicles – as applicable, does the adviser have up-to-date and accurate offering memorandums and subscription documents; are advertising restrictions adhered to; how are investors given performance reports; is the fund properly administered.
We may customize the inspection at your request. Upon completion of the onsite inspection, our staff will provide you with an exit conference to discuss findings and allow you the opportunity to provide further input. You will also be provided with a full written report (electronic or hard copy) for all inspections performed. As requested, the ComplianceWorks staff will work with you on solutions to issues and amend your compliance program to enhance the firm’s overall compliance.