Asset Management Asset Compliance and Regulatory Standards 1 — Questions and Answers
Question 1: Which US regulatory body oversees investment advisers managing client assets and enforces compliance with the Investment Advisers Act of 1940?
- Federal Reserve
- Securities and Exchange Commission (SEC) (Correct answer)
- Office of the Comptroller of the Currency
- Financial Industry Regulatory Authority (FINRA)
Correct answer: Securities and Exchange Commission (SEC)
The SEC regulates investment advisers with $110M or more in AUM under the Investment Advisers Act and enforces fiduciary compliance.
Question 2: The Dodd-Frank Wall Street Reform and Consumer Protection Act primarily addressed which asset management compliance area?
- Software license management
- Systemic risk in financial institutions and derivatives markets (Correct answer)
- Environmental asset remediation
- Real property title insurance
Correct answer: Systemic risk in financial institutions and derivatives markets
Dodd-Frank imposed systemic risk oversight, Volcker Rule restrictions, and derivatives reporting requirements on large financial institutions.
Question 3: Which US regulatory framework requires banks to hold minimum capital reserves proportional to their risk-weighted assets?
- Sarbanes-Oxley Act
- Basel III (implemented via US banking regulations) (Correct answer)
- ERISA
- Securities Exchange Act of 1934
Correct answer: Basel III (implemented via US banking regulations)
Basel III capital requirements, implemented by US banking regulators, mandate minimum capital ratios to absorb losses on risk-weighted asset portfolios.
Question 4: GASB Statement 34 was significant for US government asset management because it required:
- Private companies to disclose intangible assets
- State and local governments to report infrastructure assets on financial statements (Correct answer)
- Federal agencies to adopt IFRS
- Non-profits to value endowments at market
Correct answer: State and local governments to report infrastructure assets on financial statements
GASB 34 mandated that government entities include infrastructure assets like roads and bridges in their basic financial statements for the first time.
Question 5: Environmental asset compliance in the US is primarily governed by regulations from which agency?
- SEC
- EPA (Environmental Protection Agency) (Correct answer)
- FTC
- OSHA
Correct answer: EPA (Environmental Protection Agency)
The EPA enforces environmental laws like CERCLA and RCRA that impose obligations on companies for contaminated site remediation and hazardous waste asset management.
Question 6: Which compliance concept requires organizations to retain asset records and documentation for a specified minimum period?
- Asset Tagging
- Record Retention Policy (Correct answer)
- Impairment Testing
- Capitalization Threshold
Correct answer: Record Retention Policy
Record retention policies specify how long asset-related documents must be kept to comply with IRS, SEC, and other regulatory requirements.
Asset Management Asset Compliance and Regulatory Standards 1
Which US regulatory body oversees investment advisers managing client assets and enforces compliance with the Investment Advisers Act of 1940?