July 9, 2009
After thinking about your proposal to require investment advisers who directly bill their fees to client accounts to undergo a surprise audit, I can only see one party that will benefit, the auditors. The business will have to endure the costs of the audit which will eventually be passed on to the clients. Audits are not designed to detect fraud which is standard language in every engagement letter. So what are we hoping to achieve here? Have there been serious issues with advisers overbilling clients? If so it seems that a more frequent limited scope examination of billing practices by the SEC would end that in a hurry. I request that you reconsider this aspect of the proposal.