I wrote back in May about the SEC’s proposal to require surprise audits of Registered Investment Advisers who have custody of client assets. The proposal also clarified that custody requirements apply to advisers who withdraw advisory and/or management fees directly from client accounts. Therefore, advisers with custody of client funds would be required to undergo surprise audits, estimated by the SEC to be $8,100.

The Securities Industry and Financial Markets Association (SIFMA) recently said not so fast. $8,100 is severely underestimated.

According to SIFMA, estimates for surprise audits of RIAs who custody funds are as high as $282,800. You read that right: nearly three hundred thousand dollars.

Obviously the exact estimate depends on the amount of assest under management and the number of accounts, custodians, and securities maintained by an RIA.

For more information on the cost estimates, refer to this article at InvestmentNews.

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This entry was posted on Wednesday, August 5th, 2009 at 6:06 pm and is filed under Practice Management. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.