The Handbook of Municipal Bonds

CHAPTER 25

Using Auditing Techniques to Develop Investment Adviser Compliance Procedures

Kevin Reilly, CPA Investments Compliance Specialist Guardian Life Insurance Company of America

 

 

 

Steal a man’s good name, or steal a company’s reputation, and you have stolen something priceless. Reputations drive business. It’s the basic element of trust. Whether you are buying a television, a life insurance policy, or investment advice, you expect the company on the other side of the transaction to be fair. Damage that expectation, and many reasonable buyers will choose another company. Destroy that expectation, and all reasonable buyers will take there business elsewhere.

In the adviser business, compliance departments help protect their company’s reputation. Investment advisers with strong compliance programs have a competitive advantage over those that do not. These programs not only promote compliance with regulations, they protect a company’s reputation and foster trust. Therefore, a strong compliance program will actually help the business grow.

The investment adviser industry, as industry in general, has undergone extensive reforms to ensure that the trust between customers and the industry remains strong. In order to “keep the trust,” the Securities and Exchange Commission (SEC) adopted a rule which, among other requirements, mandated that investment advisers appoint a chief compliance officer, and that the chief compliance officer adopts written policies and procedures reasonably ...