Rules Under the Investment Advisers Act of 1940 -

>> Rule 206(4)-2 requires investment advisers with custody or possession of client funds and securities to undergo surprise examinations. The surprise examinations require a CPA to randomly examine the investment adviser's books to verify client assets. The random examination must occur at least once per year and must be performed without prior notice to the adviser.

>> Rule 204-1(b)(2) requires the investment adviser to file a balance sheet within 90 days of the adviser's fiscal year-end.