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Investment Advisory Compliance Audit Checklist

A comprehensive checklist for auditing compliance practices within investment advisory firms, focusing on regulatory adherence, fiduciary responsibilities, and client protection measures.

Investment Advisory Compliance Audit Checklist

by: audit-now
4.6

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About This Checklist

In the highly regulated financial services industry, ensuring compliance within investment advisory practices is paramount. This Investment Advisory Compliance Audit Checklist is designed to help firms navigate the complex landscape of regulatory requirements, fiduciary responsibilities, and client protection measures. By systematically evaluating key areas of compliance, investment advisory firms can mitigate risks, enhance their operational integrity, and maintain the trust of their clients. This comprehensive checklist serves as a vital tool for identifying potential compliance gaps, implementing best practices, and staying ahead of regulatory scrutiny in the ever-evolving investment advisory sector.

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Industry

Financial Services

Standard

SEC Investment Advisers Regulations

Workspaces

Trading floors

Occupations

Compliance Officer
Investment Advisor
Legal Counsel
Risk Manager
Chief Financial Officer
1
Is the investment advisory firm compliant with SEC regulations?
2
Describe how the firm ensures fiduciary responsibility to clients.
3
What is the current status of the firm's risk management practices?
4
Does the firm have measures in place to protect client data?
5
Summarize the findings of the last compliance program review.
6
What is the average risk rating for client investments?
Min: 1
Target: 3
Max: 5
7
How frequently is regulatory compliance training conducted for staff?
8
When was the last compliance audit conducted?
9
Describe the mechanism for gathering client feedback on services.
10
How often are investment advisory policies reviewed and updated?
11
Is there a clear segregation of duties in critical investment processes?
12
Outline the procedures for reporting compliance incidents.
13
What is the average time taken to resolve compliance-related issues?
Min: 1
Target: 30
Max: 365
14
How often are internal audits conducted on operations?
15
What measures are in place to assess the effectiveness of the compliance program?
16
How frequently does the firm conduct client satisfaction surveys?
17
What is the average time taken to respond to client inquiries?
Min: 1
Target: 24
Max: 168
18
Is there a structured client onboarding process in place?
19
Describe the strategy for communicating with clients.
20
What tools are used for managing client relationships?
21
Is there an ongoing compliance monitoring program in place?
22
What is the average time taken to resolve compliance issues?
Min: 1
Target: 15
Max: 365
23
How often are compliance reviews conducted?
24
Describe the compliance training program for employees.
25
What recent updates have been made to the compliance program?

FAQs

Investment advisory firms should conduct comprehensive compliance audits at least annually. However, more frequent reviews of high-risk areas or in response to significant regulatory changes may be necessary.

Key areas typically include registration and licensing, client agreements, fee structures, marketing materials, conflict of interest disclosures, custody of client assets, recordkeeping practices, and cybersecurity measures.

The audit should involve the firm's Chief Compliance Officer, legal counsel, key management personnel, and potentially external compliance consultants or auditors for an independent perspective.

Firms should develop a detailed action plan for each identified issue, assigning responsibilities and deadlines for remediation. Regular follow-up meetings should be held to track progress and ensure timely resolution of compliance gaps.

Technology plays a crucial role in modern compliance audits, including automated compliance monitoring systems, data analytics for detecting anomalies, and secure document management systems for maintaining required records and demonstrating compliance efforts.

Benefits of Investment Advisory Compliance Audit Checklist

Ensures adherence to SEC regulations and fiduciary standards

Helps identify and address potential compliance vulnerabilities

Enhances client trust through demonstrated commitment to regulatory compliance

Reduces the risk of regulatory fines and reputational damage

Provides a structured approach to maintaining and improving compliance programs