Episode 59: Preparing for Year-End

On Episode 59, we summarize our year end compliance checklist to help ensure all applicable compliance filings and reviews get completed.



CCO Buzz: Hello and welcome back to the CCO Buzz!  The year sure is flying by!  It’s hard to believe that 2019 is almost over.  In September, we issued a Risk Management Update that contains a checklist for compliance personnel to use to help ensure all applicable compliance filings and reviews get completed by year-end.  We thought it also would be helpful to summarize the checklist in our CCO Buzz, so let’s jump right in.

First, take a look at the condition of your compliance program and also assess your annual review process.  Have you performed a risk assessment and conflict inventory yet? Have you tested your testing process to make sure it is working properly? Have you made sure all recommendations and tasks noted in last year’s annual review have been implemented? Have you confirmed required books and records are being maintained?

Next, take a look at the strength of your cybersecurity program.  Have you assessed your cybersecurity policies and protocols for effectiveness? Is your incident response plan robust enough? Have employees been properly trained?

Now that it’s November, you should begin preparing for year-end regulatory filings. Have you obtained a copy of the IARD Renewal calendar and scheduled all deadlines for filings and payment of annual fees?  Be sure you pull the IARD Preliminary Renewal Statement and pay all required filing fees by December 16th.  Have all registered personnel reviewed their Form U-4 for accuracy?  Have you scheduled any required financial audits?  If you’re required to obtain an annual surprise audit for custody, make sure the Form ADV-E is timely filed by the independent auditor. 

In December, you’ll want to take some time to analyze service provider and solicitation arrangements.  Have you reviewed solicitor arrangements to ensure they are in compliance with Rule 206(4)-3 of the Advisers Act?  Have you confirmed that all solicited clients have received and signed the required solicitor disclosure statement?  Have you performed and documented due diligence on service providers used by the firm? 

December also is a good time to provide compliance training to all employees and also make sure all firm documents are up to date, including all marketing materials. 

The regulatory landscape continues to advance, so it’s also important to look at what the SEC has been doing during 2019.  For example, the SEC has brought a number of enforcement actions against advisory firms that focused on the strength of their compliance programs and adequacy of disclosures.  Notably, these actions were issued even though there had been no direct harm to clients.

You should also review the Risk Alerts the SEC issued during the year. To date for 2019, they cover:

  • Regulation S-P and important safeguarding policies;
  • Network storage of client records;
  • Supervision of advisory reps, conflicts of interest and disclosures; and
  • Principal and agency cross trading.

These alerts are very helpful tools to compliance personnel, as they provide notice of deficiency patterns seen during exams and can be used to help determine whether a firm is fully compliant in the subject areas.

Be sure to also begin planning for next year, as Regulation Best Interest and Form CRS have 2020 compliance deadlines. 

Here at Core Compliance, we can help with all of your compliance needs, so feel free to contact us at 619-278-0020 or info@corecls.com.  Thank you!

Well that’s it for this week’s episode. If you’d like additional information, please check out our website at www.corecls.com. You can also follow us on Facebook, LinkedIn, or Twitter @CoreCls. Thank you, and we hope you tune-in to next week’s episode of the CCO Buzz.



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