Surprise Custody Examination
The Investment Advisers Act of 1940 mandates that its registered investment advisers have custody of client funds unless a qualified custodian maintains those funds in a separate account for each client under that client’s name or in accounts that contain only client’s funds and securities, under the investment adviser’s name as agent or trustee for the clients, in addition to other responsibilities.
Investment advisers must have a “Surprise” accountant examination to verify that the client’s funds and securities held at a custodian exist, are in the proper name, and the totals match the investment advisor’s records.
We are a PCAOB inspected firm that meets the regulatory requirements to audit investment entities of any size. Our audit approach will make your audit experience as seamless as possible.
We work with investment advisors at all stages of their life cycle including start-ups, mature entities, and ones going through the liquidation process.
A typical Surprise Custody Examination may include the following procedures:
- Confirmation with the qualified custodians of client funds and securities as of the date of the examination and that the client’s funds and securities are held in either a separate account under the client’s name or in accounts under the name of the investment adviser as agent or trustee for clients.
- Confirmation with the client of funds and securities held in the account as of the date of the examination and contributions and withdrawals of funds and securities to and from the account since the date of the last examination; where confirmation replies are not received, the accountant should perform alternative procedures.
- Reconciliation of confirmations received and other evidence obtained to the investment adviser’s records.
