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Investment Advisory Compliance Audit Checklist

A comprehensive checklist for auditing compliance in investment advisory practices, covering regulatory requirements, fiduciary responsibilities, and client protection measures.

Investment Advisory Compliance Audit Checklist

by: audit-now
4.1

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About This Checklist

In the complex landscape of financial services, maintaining regulatory compliance in investment advisory practices is crucial. This Investment Advisory Compliance Audit Checklist is an essential tool for ensuring that financial advisors and firms adhere to the stringent regulations governing their industry. By systematically evaluating key compliance areas, this checklist helps identify potential regulatory breaches, safeguard client interests, and maintain the integrity of investment advisory services. Regular use of this checklist can significantly reduce the risk of regulatory penalties and reputational damage while fostering trust in the advisor-client relationship.

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Industry

Financial Services

Standard

SEC Investment Advisers Regulations

Workspaces

ATM locations

Occupations

Compliance Officer
Investment Advisor
Legal Counsel
Regulatory Affairs Specialist
Chief Risk Officer
1
Is the investment advisory practice compliant with SEC regulations?

Select the compliance status.

To ensure adherence to legal requirements and protect clients.
2
Describe how the firm ensures it meets fiduciary duty obligations.

Provide a detailed description of fiduciary duty practices.

To evaluate the measures taken to uphold fiduciary responsibilities.
3
Rate the effectiveness of client protection measures on a scale of 1 to 5.

Provide a rating from 1 (Very Poor) to 5 (Excellent).

To assess the quality of measures in place for client protection.
Min: 1
Target: 3
Max: 5
4
How often does the firm conduct regulatory audits?

Select the frequency of audits.

To determine the frequency of compliance assessments.
5
When was the last compliance review conducted?

Select the date of the last compliance review.

To track the timeliness of compliance reviews and ensure regular evaluations.
6
Summarize any client feedback related to investment advisory services.

Provide a detailed summary of client feedback.

To gather insights on client satisfaction and areas for improvement.
7
Has the investment policy been reviewed in the last year?

Indicate if the review has been completed.

To confirm that the investment policy is up-to-date and aligned with regulations.
8
How many hours of compliance training have employees completed this year?

Enter the total number of training hours.

To assess the level of compliance education among staff members.
Min: 0
Target: 10
Max: 100
9
What is the current compliance risk level for the firm?

Select the compliance risk level.

To evaluate the perceived risk associated with compliance issues.
10
List any recent regulatory changes affecting the firm.

Document recent regulatory changes.

To ensure the firm is aware of and responsive to regulatory changes.
11
How many client complaints have been resolved in the last year?

Enter the number of resolved complaints.

To assess the effectiveness of the firm's complaint resolution process.
Min: 0
Target: 5
Max: 100
12
When is the next scheduled compliance audit?

Select the date of the next compliance audit.

To ensure the firm has planned for future compliance evaluations.
13
What is the current status of advisory practice governance?

Select the governance status.

To evaluate the governance framework in place for advisory practices.
14
Describe the processes in place for compliance monitoring.

Provide a detailed description of compliance monitoring processes.

To understand how compliance is monitored and enforced within the firm.
15
What is the allocated budget for compliance activities this year?

Enter the annual compliance budget amount.

To assess the financial commitment towards compliance and risk management.
Min: 0
Target: 50000
Max: 1000000
16
Has the firm verified compliance with SEC regulations this quarter?

Indicate if compliance has been verified.

To confirm ongoing adherence to SEC regulations.
17
How often does the firm communicate with clients regarding compliance updates?

Select the communication frequency.

To assess the frequency of client engagement on compliance matters.
18
Provide an overview of the firm's investment advisory policies.

Summarize the key policies in place.

To understand the framework guiding the advisory practice.
19
How many compliance violations have been reported in the last year?

Enter the total number of compliance violations.

To evaluate the incidence of compliance issues within the firm.
Min: 0
Target: 2
Max: 100
20
When was the last client training session conducted?

Select the date of the last training session.

To ensure that clients are being educated on compliance matters.

FAQs

Investment advisory compliance audits should be conducted at least annually, with more frequent reviews of high-risk areas. Some firms may opt for quarterly audits to ensure ongoing compliance.

Key areas include registration and licensing, fiduciary duty compliance, fee structures, marketing materials, conflict of interest disclosures, client communication records, and cybersecurity measures.

These audits are typically conducted by internal compliance officers, external compliance consultants, or specialized legal counsel with expertise in securities regulations.

The checklist ensures that advisors are meeting their fiduciary responsibilities, maintaining transparent fee structures, and properly managing conflicts of interest, all of which are crucial for maintaining client trust.

Yes, the checklist can be customized to address specific regulatory requirements for different types of advisory firms, such as those focusing on high-net-worth individuals, institutional investors, or retail clients.

Benefits of Investment Advisory Compliance Audit Checklist

Ensures compliance with SEC regulations and fiduciary responsibilities

Mitigates risks associated with regulatory violations and potential fines

Enhances client trust through transparent and compliant advisory practices

Streamlines internal compliance processes and documentation

Facilitates early detection of potential compliance issues