Building a SEC Compliant

Expense Program

More Tips for Building a SEC Compliant Expense Program

MyComplianceOffice and guest speaker Timothy Goodwin of Blueriver partners presents a discussion from our July webinar on Tips for Building a SEC Compliant Expense Program.



Timothy Goodwin

Mr. Goodwin has over 13 years of regulatory compliance, internal audit and management experience. Prior to joining Blue River Partners, Mr. Goodwin spent over six years with TPG Capital, LP, a leading global private investment firm with more than $70 billion in assets under management. He most recently served as Director of Enterprise Risk Management and Internal Audit with a focus on documenting and testing TPG’s fee and expense allocations across private equity funds and business platforms.


 You can download a full copy of the slides from this webinar.



Full video transcript available below:

Wrap up and Additional Tips

Our last slide, here we have some additional tips. I talked about ... I show here the annual review. I just put annual review just because that's what's required, but in the area of expense allocations, with quarterly financial statements and other shorter periods, really an annual review is not sufficient in this case. You should follow the SEC's playbook and review the general ledger, and you should do that frequently. The only way you're going to understand all those different conflicts, and we went through a bunch of them here but there are going to be conflicts within your organization that you can't comprehend until you look into the general ledger and get into the detail. That's my experience. Things that I didn't think of when I'm thinking about the issue, from a 30,000 foot level, reveal themselves, when you get down into the details.

Pay special attention to, I'm just reiterating what the SEC has told us.

The last point there, expense allocation training. I cannot emphasize this point enough. Once again, the typical process is for annual compliance training, but for accounting personnel that are on the ground, maybe not necessarily have a compliance background and may not necessarily be familiar with all of the SEC's focus in this area, walking through those enforcement actions with the accountants responsible for expense allocation, I think is almost necessary. They should have an idea of the types of issue that had come up and the SEC has focused on, because I don't know how many times I've talked to an accountant about a thousand dollar, 5,000 dollar, 10,000 dollar expense and the accountant will start talking about materiality. As I stated earlier, there really is no materiality in these cases and accountants, really in the weeds, doing this on a day to day, should be familiar with your firms responsibilities for allocating expenses pursuant to your disclosure documents.

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