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Effects of Recent SEC Changes on Investment Advisors

The AICPA Professional Ethics Division and the Center for Audit Quality recently issued AICPA/CAQ Alert 2014-11, dated November 19, 2014. The Alert references the SEC’s position that word processing services are not to be performed for entities that are required to follow the SEC independence rules. In short, audit firms cannot perform the role of auditor and preparer at the same time.  As a result, the following services related to the assembling of financial statements by an independent CPA firm, are interpreted to be prohibited:

  • Providing financial statement templates that are not publicly available
  • Preparing a draft of the financial statements
  • Word processing edits to draft financials statements
  • Printing or producing copies of financial statements
  • Stapling or binding financial statements
  • Preparing a PDF document of financial statements


Your independent auditor may not assist in the preparation of your financial statements, or for the statements of hedge funds and pooled investment funds, leaving you with two courses of action to choose from – in-house or outsource. Wolf clients were able to deal with the Alert as follows:

  • In-house – For our clients that chose to perform these tasks in-house, we made instructions publicly available that assisted in the process of preparing the financial statements in word and excel documents.  These documents were able to ease the learning curve on the additional tasks to be performed.  Having members of our engagement team available to answer any questions regarding the changes also allowed us to ensure the final product still met the high standards our clients expect.
  • Outsource – For clients that outsourced these tasks to a third party, we were able to integrate our services and work both directly, and through our clients with the third party to reduce the burden on our clients. Your auditor should be the best resource for you, and communicate openly with the necessary parties to ensure your financial statements are prepared correctly.


Wolf & Company understands that this independence interpretation was burdensome to many of our clients. Within the constraints of the rules, we worked together to mitigate any negative impact on the audit process during this past year, which led to the timely release of our clients’ financial statements with the same high quality standards that they are accustomed to. Our clients were able to benefit from our ability to anticipate their needs. 

We appreciate the opportunity to be of continued service and if your auditor didn’t “ease your pain” subsequent to this interpretive alert – please give us a call.