How often should investment advisers conduct internal compliance audits?

Investment advisers should conduct internal compliance audits at least annually to ensure that they adhere to regulatory requirements and internal policies. Annual audits provide a systematic review of the compliance program, helping to identify potential issues or areas for improvement. This frequency aligns with the expectations set by regulators, who emphasize the importance of regular oversight and accountability within an advisory firm to safeguard client interests and promote ethical practices.

Conducting audits annually allows the firm to stay proactive in its compliance efforts, adapting to any regulatory changes or shifts in business operations that may arise throughout the year. This regular review helps in strengthening the firm's risk management framework and can also serve as a vital step in preparing for regulatory examinations, thereby ensuring that the adviser maintains best practices in compliance and governance.