Practice question, Annual compliance review
Show the dates of your last three annual reviews and explain any interval longer than twelve months, including what happened to the review when compliance staff changed.
Taft practice question: not an official regulator question. SEC Division of Examinations, United States (federal). For SEC-registered investment advisers. Evidence category: Governance records.
Not legal advice. A practice prompt for rehearsing how your team explains its controls and evidence. No scoring, no model answer, no implication that a regulator will ask these words.
Authored by Taft. Last checked 2026-11-09. All questions.
Why it is relevant
Staff reported advisers with gaps between annual reviews, reviews performed for periods greater than 12 months, and extended intervals after personnel changes such as a CCO departure.
Sources: [1] Section II, Conducting timely annual reviews
Evidence to locate
Suggested, not mandatory. A regulator's actual request list governs.
Annual and interim reviews of policies and procedures, including any reports prepared, with their dates.
Sources: [2] Attachment, Compliance Program and Oversight Process
Follow-up prompts
If the firm registered recently, when was the first review completed?
Applicability
- Applies to
- Advisers registered or required to be registered with the SEC.
- Does not apply to
- Not stated.
Cite
Cite the official source first. Then: Taft Compliance Group, Exam-prep toolkit (draft), question q-annual-review-timing, https://taftcompliance.com/resources/exam-prep-toolkit/questions/q-annual-review-timing, last checked 2026-11-09.
Sources
U.S. Securities and Exchange Commission, Division of Examinations, Risk Alert: Examinations Observations Regarding Investment Adviser Annual Compliance Reviews (staff statement). regulator guidance. Section II, Conducting timely annual reviews, pages 1 to 2.
Checked 2026-11-09; published 2026-09-14.
Supporting passage
Conducting timely annual reviews. The staff observed advisers that did not perform reviews of their compliance policies and procedures, at least annually, to determine their adequacy and the effectiveness of their implementation, as required. Examples include advisers that: Had gaps in their annual reviews (e.g., conducting reviews for 2021 and 2023 but omitting 2022). Performed annual reviews for periods of greater than 12 months, including first reviews at 18 months post-registration with the Commission, as well as extended intervals due to business, operational, and personnel changes (e.g., Chief Compliance Officer ("CCO") departures).
U.S. Securities and Exchange Commission, Division of Examinations, Risk Alert: Investment Advisers: Assessing Risks, Scoping Examinations, and Requesting Documents (staff statement). regulator guidance. Attachment, Typical Initial Information Examiners Request of Investment Advisers: Compliance Program and Oversight Process; Valuation; Information Processing, Reporting, and Protection.
https://www.sec.gov/files/risk-alert-ia-risk-and-requesting-documents-090623.pdf
Checked 2026-11-09; published 2023-09-06.
Supporting passage
Compliance policies and procedures in effect during the examination period. Tests performed (i.e., compliance reviews, quality control analyses, surveillance, and/or forensic or transactional tests performed by the firm). Annual and/or interim reviews of policies and procedures, including any reports prepared. Record of compliance exceptions. Inventory of compliance risks and conflicts of interest that forms the basis for policies and procedures and notations regarding changes made to the inventory. Valuation process. Fair-valued and illiquid securities held by clients. Advisory fee calculations. Pricing overrides. Safeguards for the protection of customer records and information. Business continuity plan. Cybersecurity incidents or breaches (e.g., incident description, impact, and remediation).
Changes to this question
No released changes.