SEC Compliance and Importance Of Annual Audit Of SEC Registered Investment Firm

October 31, 2016 Business & Finance

SEC compliance is basically the conformance to the rules and regulations made and enforced by Securities and Exchange Commission. So first, let us explore some basics about SEC and know it a bit in detail!

SEC Compliance and Importance Of Annual Audit Of SEC Registered Investment Firm

Important things about SEC you need to know

SEC (Securities and Exchange Commission) is basically a government agency that oversees the activities of the financial professionals, securities transactions, as well as mutual fund trading to prevent from intentional and fraud deception. SEC offices include the following.

  • Economic analysis
  • Compliance
  • Chief Accountant
  • International Affairs
  • General Counsel
  • Financial Management
  • Information Technology
  • Executive Director
  • Public Documents
  • Investor Advocacy and Education
  • Risk Assessment
  • Secretary
  • Equal Employment Opportunities
  • Administrative law Judges
  • Inspector General

The ones who should comply with SEC standards generally work in the security industry, municipal advisers, investment companies and advisers, brokers, mutual funds, etc. The government agency monitors the actions of all these professionals properly at the federal, civil, self-regulatory, state, and criminal levels.

Generally, the SEC regulations are strict, thorough, and very demanding. It is true that complying with all the financial statement requirements, banned activities, mandated activities, regulations and rules, unofficial interpretations, and technical filing conditions can be sometimes very daunting.

Nevertheless, the main objective of SEC is to prevent the investors from any kind of fraud and to enable the capital formation needed to support the overall economic growth. It even makes sure that the security market remains fair, orderly, and efficient. You can visit focus1associates.com for regulatory compliance.

What are the main divisions of SEC?

  • Corporate Finance – This division assures the corporate disclosure of essential information to investing public.
  • Trading and Market – This division monitors the efficiency, fairness, and order in the market activities.
  • Invest Management – This division enables the protection of the investors. It even encourages the capital formation through the regulation and oversight of investment management industry.
  • Enforcement – This division investigates about the security law violations and even initiates the criminal and civil actions.

What should you expect out of SEC Audits?

SEC carries out the audits of the investment firms and advisers to make sure that they properly comply with its rules and regulations. This event is necessary and routine. It is equally important for the investment firms to remain compliant in their daily operations.

Conducting their own audits internally can also be a good idea for the advisers and other entities. It helps them to identify their weaknesses and find out the solutions before SEC audit occurs. Knowing about the SEC audits will assure the positive results out of the audit and will ensure that it goes well. The SEC staff will normally ask for the following.

  • Lists of trades
  • Sales journal and copies of purchases
  • Lists of terminated and newly opened accounts in some specific period
  • Client lists including their asset values and account types
  • Quotation service lists

Regular SEC audits are very important to ensure proper functioning of the major departments, especially investment market. It actually provides them with the reliable information and even assures honest relations between them.