SEC Form N-17f-2
What Is SEC Form N-17f-2?
SEC Form N-17f-2 is a filing with the Securities and Exchange Commission (SEC) that must be presented by investment companies that have custody of securities or comparative investments. The investment company is required to retain a independent public accountant to check the company's securities and comparative investments that are held by actual examination three times during each fiscal year.
Understanding SEC Form N-17f-2
SEC Form N-17f-2 is otherwise called "Certificate of Accounting of Securities and Similar Investments in the Custody of Management Investment Companies." It is required by Rule 17f-2 under the Investment Company Act of 1940. The purpose of this form is for the SEC to ensure that the certificate is appropriately credited to the investment company and that the investment company's custodial accounts hold exactly the securities that are reported as held in clients' accounts.
The accountant involved must prepare a certificate stating that the examination has happened with a description of the examination. Management signs the form and submits it to the SEC along with the independent accountant's attestation.
The accountant must likewise be an independent auditor, who is a certified public accountant (CPA) or chartered accountant who examines the financial records and business transactions of a company with which he isn't affiliated.
An independent auditor is regularly used to keep away from conflicts of interest and to ensure the integrity of performing an audit. Independent auditors are often utilized — or even mandated — to safeguard shareholders and potential investors from the occasional fraudulent or unrepresentative financial claims made by public companies. The utilization of independent auditors turned out to be more critical after the implosion of the dotcom bubble and the entry of the Sarbanes-Oxley Act (SOX) in 2002.
Key Subsections of Rule 17f-2
Rule 17f-2 expects that securities must be deposited by an investment company in the safekeeping of a bank or other company whose functions and physical facilities are directed by a federal or state regulator. Such securities on deposit must be physically segregated consistently. Nonetheless, securities that are collateralized, hypothecated, pledged, or put in escrow for a loan, or securities in transit in connection with the sale, exchange, redemption or other transaction that outcomes in the pending change of physical ownership don't need to be deposited for safekeeping by the investment company.
Another important subsection is the identification of the persons authorized to approach the deposited securities. Rule 17f-2 additionally subtleties the exact procedures to be followed for the deposit and withdrawal of securities. Finally, the rule specifies that independent examinations by a public accountant are performed something like three times in a fiscal year, with no less than two of them occurring without prior notice to the investment company.
Features
- SEC Form N-17f-2 is a regulatory document named, Certificate of Accounting of Securities and Similar Investments in the Custody of Management Investment Companies.
- This form must be completed and documented by investment companies that have custody of securities or comparable investments for clients.
- The form must be certified by an independent public accountant, who might be required to inspect the company's securities positions three times each year.
