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ICI Issues New Guidance To US Mutual Funds On Compliance Issues

by Glen Shapiro, LawAndTax-News.com, New York

19 December 2005


The Investment Company Institute (ICI) last Thursday issued detailed guidance to assist mutual funds in complying with a rule requiring an annual review of compliance programs and a report to fund boards of directors on the adequacy of those programs. Funds must complete an initial annual review by April and report to boards no later than June.

The ICI revealed that it has developed a paper, entitled "Assessing the Adequacy and Effectiveness of a Fund's Compliance Policies and Procedures," to assist Chief Compliance Officers (CCOs) and others in meeting the review and reporting requirements issued by the Securities and Exchange Commission.

Among other issues, the paper outlines:

  • The process for planning annual reviews;
  • The principal options for conducting compliance testing, including interviews of key personnel, observations of daily operations, data testing, and trend analysis;
  • The process for preparing annual reports to fund boards; and
  • Related recordkeeping requirements.


"Clearly, mutual fund investors and boards deserve meaningful reviews to ensure that their funds are subject to rigorous compliance procedures. This paper, drawing on the experience of our members, outlines specifics steps toward achieving that goal," explained Elizabeth Krentzman, ICI General Counsel, adding that:

"We hope that Chief Compliance Officers will find our guidance useful in conducting these compliance reviews and in preparing Board reports. We are ready to offer further assistance as this new process evolves over time."


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