Surprise Examinations

Amendments to the SEC's Advisers Act Custody Rule

Target Audience: Advisors, Custodians, Law Firms, Family Offices, and Trustees.

Our auditors at Feeley and Driscoll navigate the December 30, 2009 SEC adopted amendments to its Rule 206(4)-2 under the Investment Advisers Act of 1940, as amended (the “Custody Rule”) to best suit advisers subject to the annual surprise examination requirement.

Originally proposed earlier in 2009, the amendments of the Custody Rule are intended to provide additional safeguards and discontinue certain exemptions for client funds and securities that are in the custody of registered investment advisers.  As the Custody Rule becomes effective on March 12, 2010, Feeley and Driscoll’s CPAs are prepared to assist with the annual surprise examination requirements required to take place by December 31, 2010.

The amended Custody Rule requires surprise examinations of the advisers with custody of client funds and securities by independent Certified Public Accountants.  The Custody Rules do however provide exemptions to certain advisers from the annual surprise audit.
Some of the exemptions include:

• Advisers that deduct fees directly
• Advisers to Pooled Investment Vehicles
• Funds of Funds
• Special Purpose Vehicles

New Requirements and related changes include and apply to:

• Annual Surprise Examination
• Delivery of Account Statements
• Internal Control Reports
• Special Purpose Vehicles

Contact Feeley & Driscoll as an Independent Certified Public Accountant to help you navigate the Surprise Examinations: Email us or call us at 1 (888) 875-9770

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