SurpriseCustody Examinations

Offering Critical Services that MeetNew Mandatory SEC Requirements

The SEC's new provisions for asset custody expand the reporting requirements for Registered Investment Advisers (RIAs). Each RIA with custody is required to have an annual surprise custody examination conducted by an independent certified public accounting firm. By requiring an official examination with "another set of eyes," RIAs can ensure better protection for their clients against misappropriation.

Why Choose BBW?

Integrity Attention to Detail Personal Service

Accountants first. Advisors foremost.

Partner Contact:

Steven J. Johnston10815 Sikes Place, Suite 100Charlotte, NC 28277704-841-9814 Direct704-841-9800 Main704-841-9802 Faxsjohnston@bbwpllc.com

www.bbwpllc.com

Locally entrenched.Professionally connected.Uniquely qualified.

BBW's Assurance Group providesquality-centric services that drive business value for clients.

By coupling extensive experience with keen regulatory insight, BBW provides accounting, audit, and related services to businesses, governmental entities and not-for-profit organizations.

Blair, Bohlé & Whitsitt PLLC examinations ensure compliance by verifying account integrity.

ASSURANCE & ADVISORY

Guidance from the SEC on the New Rule:

BBW's examination report includes an opinion as to whether, with respect to the rules under the Act, the investment adviser was in compliance, in all material respects, with paragraph (a)(1) of Rule 206(4)-2 as of the examination date and had been complying with Rule 204-2(b) during the period since the prior examination date.

The Securities & Exchange Commission (SEC) approved amendments to Rule 206(4)-2 (the "Custody Rule") under the Investment Advisors Act of 1940 effective May 12, 2010. All surprise custody examina-tions must be initiated before December 31, 2010.

BBW provides high value for client investments by fitting services to each individual need. The firm's strong core competencies are supplemented by a network of professional partner resources focused on quality, value-based services. Through its network, clients can fulfill unique and specialized needs through partners whose personal touch and attention to detail mirror that of BBW.

Rule 206(4)-2(a) generally requires that client funds and securities of which aninvestment adviser has custody under the rule be verified by actual examination at least once during each calendar year by an independent public accountant, through a written agreement, between the investment adviser and the accountant, at a time that is chosen by the accountant without prior notice or announcement to the investment adviser.

BBW is an Independent and Insightful Accounting Partner.

BBW will produce verification through:

- Confirmation with the qualified custodian(s) of client funds and securities asof the date of the examination and that the client's funds and securities are heldin either aseparate account under the client's name or in accounts under the name of the investment adviser as agent or trustee for clients.

- Confirmation with the client of funds and securities held in the account as of the date of the examination and contributions and withdrawals of funds and securities to and from the account since the date of the last examination; where confirmation replies are not received, the accountant should perform alternativeprocedures.

- Reconciliation of confirmations received and other evidence obtained to theinvestment adviser's records.

As an independent resource, BBW is required to notify the Commission within one busi-ness day of any finding of any material discrepancy during the course of examinations.