Under what circumstances must an adviser still provide an audited balance sheet to its advisory clients?
Although having custody no longer causes SEC-registered advisers to be subject to the balance sheet requirement, Item 18 of Form ADV Part 2A requires an SEC-registered adviser that receives the prepayment of fees exceeding $1,200 per client and six or more months in advance to include an audited balance sheet in its brochure to clients from whom the adviser has received such prepayments.
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