Using Outsourced CCO Services for Compliance Management
Firms often require the services of a Chief Compliance Officer to make sure that the firm is aligned with federal and state regulations. Outsourcing offers a solution for smaller or developing firms, as it allows them to work with a team of professionals who perform the CCO role. This makes it easier for firms to build their compliance program, as this provides a scalable solution. Here is more information about using outsourced CCO services for compliance management:
Program Development
A CCO helps a firm create and maintain policies and procedures, forming a compliance program that fulfills SEC and FINRA requirements. This includes working on maintaining compliance manuals and administering the IARD system. Outsourced CCO services include creating the Code of Ethics, the Insider Trading Policy, and the Business Continuity Policy.
CCOs also organize compliance committee meetings. This includes preparing a customized meeting agenda and materials and providing follow-up information for representatives who were not able to attend the meeting. They also prepare internal compliance training on related topics for the team.
Filing Assistance
Services also include overseeing regulatory filings. Firms are required to make yearly amendments to the required Form ADV, or the Uniform Application for Investment Adviser Registration, Parts 1 and 2. An amended Form ADV is filed when there is a significant business change. A CCO can help prepare the different files for the firm, such as state notice filings and Section 13 filings. A CPA team is able to send Form ADV Part 2 within 120 days of the end of the year.
Supervisory Services
CCOs offer supervisory services to make sure the firm remains compliant by managing daily compliance activities. A team is able to help with supervisory control procedures, conducting 3120 testing, and creating the annual supervisory controls report. They maintain and update supervisory procedures as required.
A CPA firm assists with compliance with public communication rules, including social media. CCO services include supervision of emails and other digital communications, such as instant messaging. The team makes sure that the online client interactions are compliant and secure by performing random reviews on a monthly basis. Marketing materials are also checked for clarity and compliance before approval, and the team performs the required filing with FINRA Advertising Regulation.
A CCO reviews, monitors, and approves outside business activities. They also have the responsibility of approving any outside brokerage accounts and account statements. CCO responsibilities include receiving periodic representative certifications. A CPA company helps fulfill disclosure requirements for outside accounts and personal trading.
Review and Exam Help
Firms undergo examinations by state, FINRA, and SEC authorities. CCO services include exam preparation assistance, book and record maintenance, and compliance gap identification. A CCO organizes required documents and coordinates resources. They offer guidance throughout the examination process and interact with regulators; this includes assisting with the initial inquiries and the follow-up.
Regulatory requirements include an annual compliance review. With Rule 206(4)-7 of the Investment Advisers Act of 1940, all SEC-registered investment advisers are required to review the firm’s compliance program. Teams acting in a CCO role work to identify any weaknesses in the program and perform the required review on behalf of the firm. This includes assessing the effectiveness of the written policies and procedures.
Other steps in the review process include performing risk assessments of the service manual and making sure the firm follows the Code of Ethics. Risk assessments are based on the company’s profile. This includes reviewing custody practices to make sure that the client’s assets are protected and checking that books and records support operational transparency. Other areas of review include the privacy policy, asset allocation, and potential conflicts of interest. Checking the disclosures helps make sure that client-facing statements match ethical standards. The team reviews prior regulatory findings to identify gaps. They note any changes in the business and document their findings.
Find Outsourced CCO Services
Outsourcing the CCO role negates the need to find a full-time hire, offering additional flexibility. Working with an experienced team provides more information about current compliance regulations. CCO services help the firm remain aligned with state, FINRA, and SEC requirements. Look for a company that is Series 7 and 24 registered. To begin receiving outsourced CCO services, contact a CPA firm today.
