Firm Financial Statements and Records 

Your firm's financial records should be just that: the firm's financial records and nothing else. Income and expenses pertaining to any other business activity should not be included.

If the investment advisory firm engages in other business activities, it is a strongly recommended best practice to have a separate bank account for each revenue stream.

During a regulatory examination, whether SEC or state, you will be requested to provide one or more of four key financial documents:

  1. Previous Year End Balance Sheet;
  2. Previous Year End Income Statement (or Profit and Loss Statement);
  3. Current Balance Sheet; and
  4. Current Income Statement (at least quarterly, but broken down monthly if possible and posted within the last 30 days).

Additionally, you will be asked to provide a list of any bank accounts, investment or brokerage accounts, credit or loan accounts, and any other accounts that could be deemed an asset or liability. You should keep statements of any accounts in its own place for ease of retrieval.

Depending on your firm's accounting processes, your firm's accounting and financial books and records could also include journals of receipts and disbursements, general and auxiliary ledgers, checkbooks, cash reconciliations, invoices, or other documents.

If the firm has any financial condition that is material to a prospective or existing client's evaluation of the firm, it is likely that is information which should be disclosed.

If you are a state-registered adviser, some states require notification if the firm's net worth or liquid net worth falls below certain amounts. These requirements vary between states.

If you'd like to keep track of your firm's accounting records, you may do so below. For example, if your firm's accounting records are complete and finished for the time period of January 1, 2024 through March 31, 2024, you would enter these dates as the Start Date and End Date, respectively.