I'll share with you just a few recent examples from verifications I've done:
- When a non-fee paying account isn't a non-fee paying account: Here's an easy solution to dealing with those accounts who don't pay their fees from the corpus of the account but instead pay them through some other means: make them non-fee paying. Simple. Much easier than having to deal with the accounting. But, sadly, incorrect. They do pay a fee and you have to account for it. However, an easy solution to avoid this is not to use the actual fees but rather the maximum fee, which I believe has more value, anyway. It's fairly straightforward and provides a simple and correct method to deal with this problem.
- A general approach to non-discretion: we often see clients who use rather broad definitions of non-discretion, such as "an account is deemed non-discretionary if its restrictions prevent the firm from managing the account according to the defined style." Actually, that is a good definition for non-discretion, but it isn't a good basis for a policy, as it is too ambiguous. You need to define the clear criteria or conditions under which you would draw this conclusion.
- Using a single sector index for a composite that crosses multiple sectors: You have to give it to Standard & Poors for the success they've had in promoting the S&P 500; it is viewed by many as "the market." And, we often want to use it as a comparative index, which is fine. However, the standards require that the benchmark match up with the composite's strategy. And so, if the composite allocates, for example, to small cap, mid cap, large cap U.S., as well as international stocks, then you need to have a blended benchmark which includes a representative from the broad world of indices for each of these sectors.