July 8, 2009
The audit requirement will place an additional burden and cost on my firm with minimal if any additional protection for my clients. Strictly enforcing regulations already in place to guard against abuse of custody of client funds would be much more effective in my opinion.
If adopted, this audit requirement will penalize some of my clients. The only accounts I directly deduct my quarterly fees from are IRA accounts where the client is taking distributions. The reason is my fees are not counted as distributions and therefore are not subject to tax if I withdraw them as fees. If an annual audit was required, I would stop this practice so as not to be subject to the audit requirement since I directly bill all other clients and have no other access to their funds. Then the IRA client would have to withdraw the funds to pay me and be subject to taxation on these fees.